Question

1. If the change in GDP in South Korea from 2016 Quarter 3 to 2016 Quarter 4 was 6%, then we may conclude that the s.a.a.r for GDP in the same period was

1. 1.6%, because s.a.r. measures quarter-to-quarter growth
2. 3.2%, because s.a.a.r. measures the upper limit of current GDP growth
3. One-fourth of 1.6%, or 0.4%, because s.a.a.r. removes all annualized data
4. Four times 1.6%, or 6.4%, because s.a.a.r. annualizes quarterly data

2. The difference between an economic indicator being a flow variable rather than a stock variable is that

1. A flow refers to measuring a variable over time, while a stock measures a variable at a point in time
2. A flow refers to measuring a variable at a point in time while a stock measures a variable in non-monetary units
3. A flow refers to measuring a variable over time while a stock measures a variable in monetary units only
4. A stock is a measure of a variable over time while a flow measures a variable at a point in time

3. The level of potential GDP used as the benchmark comparison in assessing the long-run prospects of an economy is computed as:

1. The growth in labor force plus the growth in productivity plus the growth in hours worked
2. The growth in productivity plus the growth rate of the population
3. The growth rate of population plus the growth rate of current production
4. The growth rate of current production plus the growth rate of productivity plus the growth rate in hours worked

Answer 1

1) Option D

The S.A.A.R. is known as Seasonally Adjusted Annualized Rate and it tries to negate any distortions included because of seasonal variations. It is the fact some product sales is heavily influenced by seasonal factors and that means the annualized figures could be overstated or understated.

There is not enough data about seasonality factor but it seems that seasonally adjusted rate is 1.6% for the quarter.
SAAR = 1.6% * 4
= 6.4%

b) Option A

The economics data is very important in the analysis and policymaking. The variables are categorized into 'stock variables' and 'flow variables'.
The stock variable is measured at a particular point of time. It includes asset stock such as inventory or cash stock.
The flow variable is measured over a period of time such as a quarter or a year. The GDP, inflation are flow variables which are measured over a certain time period.

c) Option A

The GDP is the measure of all the goods and services produced within a physical border of the country in a given period of time. The GDP is however subject variation because of resources such as labor or capital or market forces. The potential GDP is influenced by the growth rate in the labor force as well as labor productivity.