Neco 2018 Economics Question 29

Practice objective / multiple choice question 29 from the 2018 Neco Economics examination.

Neco 2018 Economics Objective / Multiple Choice Hard Difficulty
Question 29 NECO • 2018 • ECONOMICS • objective

Three sectors contribute to the economy's real GDP as follows: Manufacturing 30%, Services 50% and Agriculture 20%. Their respective annual real growth rates last year were 4%, 6% and 2%.\n\nThe government introduces a 2% ad valorem tax on manufacturing output, which reduces the sector's net growth contribution by the same percentage point.\n\n(a) Compute the overall real GDP growth rate before the tax.\n\n(b) Compute the new overall real GDP growth rate after the tax.\n\n(c) By how many percentage points did the overall growth rate change, and what is the relative percentage change compared with the original growth rate?

Answer Options

A. Before tax: 5.0%; after tax: 4.0%; change: -1.0 percentage points (≈20% relative decline).
B. Before tax: 4.6%; after tax: 3.8%; change: -0.8 percentage points (≈17% relative decline).
Correct Answer C. Before tax: 4.6%; after tax: 4.0%; change: -0.6 percentage points (≈13% relative decline).
D. Before tax: 4.6%; after tax: 4.2%; change: -0.4 percentage points (≈9% relative decline).
Correct Answer
C
Correct Option:
Before tax: 4.6%; after tax: 4.0%; change: -0.6 percentage points (≈13% relative decline).

About This Question

This is Neco 2018 Economics Question 29. It is one of the objective questions from the 2018 Neco Economics examination.

Difficulty level: Hard .

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