Introduction

1 Complete the following table by calculating the level change and the rate of change

 

 

Year

 Level of gross domestic product (GDP) Level change Rate of change

2015

3 064 237

2016

3 076 465

12 228

0.4

2017

3 119 984

2018

3 144 539

2019

3 149 337
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Year

 Level of real gross domestic product (GDP) Level change Rate of change

2015

3 064 237

2016

3 076 465

12 228

0.4

2017

3 119 984

43 519

1.4

2018

3 144 539

24 555

0.8

2019

3 149 337

4 798

0.2

2 People tend to confuse a decrease in the rate of change with a decrease in the level. Take note of this when you work with economic data.

According to the diagram above, the level of consumption spending was lower in 2014 than in 2013.

Incorrect. The statement is false.

This diagram indicates the rate of change and not the levels.

The % change in consumption spending by households was lower in 2014 than in 2013.

In 2014 it was 0,8% while in 2013 it was 2%. It tells us what happened to the levels not what the levels were.

If you look at the data for the levels the following emerges:

The level of consumption spending increased from R1 803 625 million in 2013 to R1 818 511 million in 2014.

The level in 2014 was greater than the level in 2013. While the levels have increased in both years, the percentage increase in 2013 was greater than the increase in 2014.

The level increased from R1 803 625 million in 2013 to R1 818 511 million in 2014.

Correct. The statement is false.

This diagram indicates the rate of change and not the levels.

The % change in consumption spending by households was lower in 2014 than in 2013.

In 2014 it was 0,8% while in 2013 it was 2%. It tells us what happened to the levels not what the levels were.

If you look at the data for the levels the following emerges:

The level of consumption spending increased from R1 803 625 million in 2013 to R1 818 511 million in 2014.

The level in 2014 was greater than the level in 2013. While the levels have increased in both years, the percentage increase in 2013 was greater than the increase in 2014.

The level increased from R1 803 625 million in 2013 to R1 818 511 million in 2014.

3 If your salary is R10 000 per month and during the hard lockdown due to Covid-19 you boss decreases it by 50 % and then after the lock down increases it by 60% you salary is _____ than before the lockdown.

Incorrect. It is lower.

A decrease of 50% in you salary decreases your salary to R5 000. A 60% increase on R5 000 is R3 000 which gives you a salary of R8 000 which is less than the original R10 000.

Correct. It is lower.

A decrease of 50% in you salary decreases your salary to R5 000. A 60% increase on R5 000 is R3 000 which gives you a salary of R8 000 which is less than the original R10 000.

4 If the United Kingdom GDP is higher than the South African GDP, it follows that the British economy is growing faster than the South African economy.

Incorrect. The statement is false.

A higher GDP level in the United Kingdom then in South Africa does not indicate that it grows faster than the South African economy. The growth rate depends on the change in the level.

Correct. The statement is false.

A higher GDP level in the United Kingdom then in South Africa does not indicate that it grows faster than the South African economy. The growth rate depends on the change in the level.

5 If the economy of Botswana is growing faster than the South African economy, it follows that the GDP of Botswana is greater than the GDP of South Africa.

Incorrect. The statement is false.

A higher growth rate does not necessarily implies that the level is higher. It means the rate at which the level changes is higher.

Correct. The statement is false.

A higher growth rate does not necessarily implies that the level is higher. It means the rate at which the level changes is higher.