2 Indicate whether the following statements are True or False. 1.2.1 The primary source of government revenue is income obtained from donations. 1.2.2 The price of the final product is ONE of the fact

Here are the solutions to the questions:

1.2 Indicate whether the following statements are True or False.

1.2.1 The primary source of government revenue is income obtained from donations.

• $\boxed{\text{False}}$

1.2.2 The price of the final product is ONE of the factors influencing the demand for labour.

• $\boxed{\text{True}}$

1.2.3 Euro is the currency used in China.

• $\boxed{\text{False}}$

1.2.4 Monetary policy governs taxation, borrowing and government expenditure.

• $\boxed{\text{False}}$

1.3 Differentiate between each of the following concepts:

1.3.1 Money wages and Real wages

• Money wages (or nominal wages) refer to the actual amount of money an individual receives for their labour, without accounting for inflation.
• Real wages represent the purchasing power of money wages, adjusted for inflation. They indicate the quantity of goods and services that can be bought with the money earned.

1.3.2 Creeping inflation and hyper inflation

• Creeping inflation is a mild and predictable rate of inflation, typically in the low single digits (e.g., 2-3% per year). It is generally considered manageable and can be a sign of a healthy economy.
• Hyperinflation is an extremely rapid and out-of-control increase in the general price level, often exceeding 50% per month. It severely erodes the value of currency and destabilizes the economy.

1.3.3 Capital market and money market

• The capital market deals with long-term funds, typically for investments that mature in more than one year. It facilitates the raising of capital by companies and governments through instruments like stocks and bonds.
• The money market deals with short-term borrowing and lending, for funds that mature in less than one year. It provides liquidity for financial institutions and corporations through instruments like commercial papers and treasury bills.