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    Ecs Ass2

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    SEMESTER1

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    Ecs Ass2

    Uploaded by

    Kgomotso Ramodike
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    SEMESTER1

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    ECS ASS2

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    SEMESTER1

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Download as pdf
    36 views22 pages

    Ecs Ass2

    Uploaded by

    Kgomotso Ramodike
    SEMESTER1

    Copyright:

    © All Rights Reserved
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    914/22, 5:32 M "Assessment 2: Attempt review Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 State Finished Completed on Sunday, 4 September 2022, 532 PM Time taken 2 hours 15 mins Marks 18.00/28.00 Grade 64.29 out of 100.00 avon T 100 Use the table below showing the exchange rates between various currencies andthe South African rand to answer the question. cura 2014 exchange rate (per 2015 exchange rate (per South African rand) ‘South African rand) Botswana pula 0,99) 411 Namibian dollar 356 423 ‘Ghanaian cedi a 5 Between 2014 and 2015, the and olla. against the Ghanaian cedi and against the Namibian a. appreciated, depreciated and appreciated b. depreciated, appreciated and appreciated -appreciated, appreciated and appreciated v 4, depreciated, depreciated andl depreciated Between 2014 and 2015, more amounts of each ofthe three currencies were needed to purchase one South African rand. Therefore, the rand appreciated against al three currencies hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 a 914/22, 5:32 M ‘Assessment 2: Attempt review aueston2 comet Mai 1.00 out of 180 MeN Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 “China 77006 600 South Africa 850,000 Based on the table above, which ofthe following statements are correct? _3 South Africa has a comparative advantage in the production of gold. China is comparatively more efficient in the production of laptops. {The opportunity cost of producing gold is lower in China than South Africa, 4, South Africa should specalise inthe production of laptops and China should specialise in the production of gold ad baandb cabcandd dbandd lAmount to give up lcount lannval production| ” p (opportunity cost) fo produce 1 ton of To produce 1 {cold gnton) Laptops (n units) " gold laptop. 2 500/71 090 000 = les | soo k coo coo 1000 000/2 500 = 0.0025 ton of ne [400 laptops gold ks 000/850 00 (0.0059 ton of Isouth atrica {5 000 lsso 000 fe20 000/5 000 = 170 laptops laora Based on the information inthe table above, we need to determine which ofthe two counties is more efficient in the production of each ‘00d Gold production 5000/2 S00 = 2 ‘Therefore, South Afric is 2 times more efficient than China inthe production of gold. This means that South Africa has a comparative advantage in the production of gold. The opportunity cost of producing gold is lower in South Aica an higher in China, South Africa only sacifces 170 laptops to produce 1 ton of gol, whereas China sacrifices 400 laptops to produce 1 ton of gold ‘Laptop production: hitpssimymodules dis. unis, ac zalmodiquizreview php allerpt=5222045&emid=213761 914/22, 5:32 M "Assessment 2: Attempt review {850 000/1 000 000 = 0,85 ‘Therefore, China is 0,85 times for efficient than South Africa inthe production of laptops. This means that China has a comparative advantage in the production of laptops. The opportunity cost of producing laptops lower in China and higher in South Arica. China Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 aveston § {A deprecation of the rand against the US dollar wil lead to a decrease in * the pic of imported good in South ica. b. the price of petrol in South Alia, «the price of South African products sod in the USA v 4. the numberof tourists from the USA visitng South Mica Your answer is correct Refer to section 4.3 of the textbook for a discussion of exchange rates. When the rand depreciates, it means that you now have to pay more {or foreign currency and impor into South Africa will Become more expensive while the price of our exports will become relatively cheaper {or foreigners. The converse holds fora rand appreciation, hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 322 914/22, 5:32 M ‘Assessment 2: Attempt review austen MeN Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 2.2 depreciation ofthe rand relative tothe US dallar will result in a decrease in South African exports to the US x ban appreciation ofthe rand relative tothe US dolar will result in an increase inthe amount of South African imports from the US -an appreciation of the rand relative to the US dollar will result in an increase in the amount of South African exports to the US 4.a depreciation of the rand relative to the US dollar will result in an increase in South Afican imports from the US. Ifthe rand appreciates relative to the dollar, it implies thatthe rand has gained in value or snow more expensive. This means that if you have rand and buy dollars, you will now receive more dollars for each rand than previously, Therefore, South Africans will now find ft cheaper {to import from the US. However, if you have dollars and buy rand, you will now receive less rand than previously. Therefore, Americans wil row find it more expensive to buy South African products and thus South African exports ta the US (or American imports from South ic) will cecrease A depreciation ofthe rand against the dollar means thatthe rand has lost value or is now less expensive. This means that if you have rand and buy dollars, you will now receive less dollars for each rand than previously. Therefore, South Africans wil find it more ‘expensive to impor from the US and imports from the US to South Arica will most likely decrease. I you have dollars and buy rand, you wll now receive mote rand for each dollar than previously. Therefore, Americans will now find it less expensive to buy South ican products, and thus South African exports to the US will increase (or American imports from South ica will increase. aueston 5 cont ‘Assume thatthe rand/dollar exchange rate is above the equilibrium exchange rate, This will lead to a. of dollar and the exchange rate will to the equibrium level, 2. surplus; fall v b. surplis; rise « shortage all 4, shortage; rise ‘The market forces of demand and supply determine the exchange rate; however, ta point above the equlbrium, the quantity demanded is less that the quantity supplied, and the exchange rate will move dovin until equilibrium is achieved where the quantity demanded is equal to ‘the quantity supplied. hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 4122 914/22, 5:32 M ‘Assessment 2: Attempt review MeN Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 athe rand has depreciated against the dolar the demand for dollars has increased the rand has weakened against the dollar. dd. the rand has appreciated against the dollar. Exchange rates are discussed in section 43 ofthe textbook An increased demand for dollars will depreciate the Rand against the dollar. hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 914/22, 5:32 M ‘Assessment 2: Attempt review auesion7 Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 RIS Price of USD (exchange rate) 12:14 Q Quantity of USD per day (billions) 2. More South African tourists visit the United States b.Aftera crime wave, American tourists cancel their plans to vist South Africa The gold price increases 4. China starts producing cheaper goods than the United States x I China starts producing cheaper goods than the United States, more people will import from China instead of importing from the USA, ‘causing the demand for dollars to decrease. Ifthe gold price increases, the supply of dollars wil increase, lf more South African tourists visit ‘the United States, the demand for dollars will increase, causing the shift showin the graph. f American tourists are scared to vist South Altica due toa crime wave, the supply of dollars will decrease Refer to section 43 inthe textbook hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 914/22, 5:32 M austen B comet Mai .00 out of 120 MeN Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 ‘Assessment 2: Attempt review [Merchansise exports h 285 INet gold expors ho Ienice receipts frat lncome receipts fez [Merchandise imports i 108 Kervice payments 160 jcome payments is [carent wansfes 4a ‘Source: SARB Quarterly Bulletin (2021) Based on the information above, the balance on the current account is. a. R177 billion, b. R108 billion. RI 109 billion, 4. R1 637 billion, ‘The balance on the current account is calculated as follows: Re (ilions) |Merchanaise exports h 286 Pius Nex gold exports hoe fas Senice receipts haa Pus income receipts fizz [Minus Merchandise imports f 108 [Minus Service payments feo [Minus income payments bis Jus Current transfers aa [BALANCE ON CURRENT ACCOUNT hos hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 22 914/22, 5:32 M ‘Assessment 2: Attempt review aioe out ot 120 Menu Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 2. supply less USO to the market b. decrease the domestic interest rate supply more ZAR to the market 4. supply more USD to the market Ifthe central bank supplies more dollars to the market, the supply of dollars will shift to the right and the rand will appreciate. Carefully study section 43 in the textbook which discusses the exchange rates. f the central bank supplies less USD to the market, the supply of ‘dollars wil shift tothe left and the rand would depreciate. Ifthe central bank supplies more ZAR to the market, the supply curves of ZAR Would sift to the right and the rand wll depreciate. If the domestic interest rate decreases, it means that foreign investors will ather invest ‘elsewhere as they may be able to earn higher interest there, andthe supply ofthe USD will therefore decreases, illustrated by a leftward shift ‘of the supply of dollars curve and thus a depreciation ofthe rand, A decrease in the interest rate level may not result in lessening the effect ‘of a depreciating rand, wsron 10 unemployment occurs when structural changes in the economy cause a mismatch between skills of workers and job requirements 2. Frictional b Structural « Seasonal 4. Cyclical Structural unemployment occurs when the skills that people have inthe labour market do not match job requirements. For example, this may be due to technologies taking over certain obs that previously required manual workers, which results in companies saving money Which would have been spent paying wages or salaries to workers. This increases the demand for higher-level skilled workers with higher levels of education and training, ‘Cyclical unemployment occurs when there is @ decline in the demand for certain goods and services, For example, during the COVID-19 national lockdown in South Africa, there was 2 dectne in the number of people eating at restaurants. This resulted in people losing their obs at restaurants and other sectors of the economy, leading to a depression. This type of unemployment varies with business cycles. Frictional unemployment occurs during the time it takes to move from one job to another. This may be dus to workers migrating to areas with better ‘economic opportunities, Seasonal unemployment occurs when people are unemployed because work only becomes available during certain Limes ofthe year. For example, the farming industry only requires workers during harvests, which only occur during certain times ofthe year. hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 22 914/22, 5:32 M aueston 11 aioe out ot 120 MeN Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 ‘Assessment 2: Attempt review ear | Preeormanaos | Namba of | preeotoranges. | Number o 2006 3% 00 RID 0 2006 Ra 120 Riz 70 2007 Re 120 Ri4 70 [Whats the value of real GDP in 2006? a. R1060 b. Rt 460 Rt 200 R600 Refer to section 5.2 of the textbook To calculate real GDP, we use the amounts prociuced ina particular year and the prices for 2005, a 2005, isthe base year. Thus, to calculate real GDP for 2006 using the given information in the table, we do the following calculation Real GOP in 2006 = (3 x 120) + (R10 x 70) = R360 + R700 = Ri 060. htps:mymodules dls. unisa ac. 2a/modiquizroview php?allempt=53220458emi ara, 532 PM ‘Assessment 2: Attempt review weston 12 Dashboard / Courses / UNISA / 2022 / Semester? / ECS160-22-52 / Online assessments / Assessment 2 Country A Country B 100) 100) 8 é q é : 8 ‘Cumulative percentage of population Cumulative percentage of population Based on the diagrams, indicate which one ofthe following statement is correct with regard to the level of inequality and the Gin cotficient 8. Country & has a higher degree of inequality an its Gini coeticent willbe smaller than that of country B, b. Country 8 has a higher degree of inequality and its Gini coetficien wll be greater than that of country A «Country & has a higher degree of inequality and is Gini coefficient will be greater than that of country B. 4, Country B has a higher degree of inequality and its Gini coetficien wll be smaller than that of country A, See section 56 of the textbook. The O8-line shows perfect equality while the shaded area indicates the area of inequality. For country A, this, area of inequality is greater than for county 8 indicating a higher level of inequality for country A. One can therefore also expect thatthe Gini coefficient for country & will be greater than the Gini coefficient for county 8 since the greater the inequality, the greater the Gini cootficient htps:mymodules ds. unisa ac. 2a/modiquizreview php?allempt=5322045&cmid=213761 10122 914/22, 5:32 M ‘Assessment 2: Attempt review ueston 13 aioe out ot 120 Menu Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 a. Susan, a South African resident, receives dividends from a foreign frm. Farmer Brown imports a tractor from Germany. A foreign firm buys an existing factory in South Africa. 4. A Chinese firm buys fewer raw materials from South Africa, x See section 5.5 ofthe textbook A deficit onthe current account exists if exports, service receipts and income receipt are less than imports, payment for services and income payments, When Farmer Brown imports a tractor, this isan inerease in imparts and consequently the deficit increases. When a foreign fr buys an existing factory in South Africa, net dect investment increases on the financial account ~it does not influence the current account. When Susan receives dividends from a foreign fim, income receipts increase and the deficit on the current account declines. When fewer raw materials are bought from South Arica, exports decline and the deficit onthe current account increases. hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 see 914/22, 5:32 M ‘Assessment 2: Attempt review uesion 14, ames. Mai 1.00 out of 120 Menu Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 ]Goods Food and non-alcoholic beverages Housing and utilities Household contents and services [Clothing and footwear South African Reserve Bank, Quarterly Bulletin, December 2020 ‘What was the percentage change for food and non-alcoholic beverages between 2018 and 20197 234% b.as% 66.1% 6.46% The percentage change in the consumer price index for food and nen-aleoholic beverages can be calculated as follows (CPhass~ Pho) 499 CPhois * % change in CPI index from 2018 to 201: hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 1202 914/22, 5:32 M ‘Assessment 2: Attempt review aueston 15 MeN Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 a. households earn RB and spend three quarters of ther income. b. households will save RBO if their disposable income is zero and will consume 0,75 of any increase in disposable income they receive. households will consume 0,25 of whatever level of disposable income they recive 4. households will consume RBO if their disposable income is zero and will consume 0,75 of any increase in disposable income they [As discussed in section 63, the consumption function provided inthis question indicates that autonomous consumption is RBO, ie. this is how much consumption will be even if income is zero, while it indicates that the marginal propensity to consume is 0,75 which indicates that (0,75 of any increase in income will be consumed. Households saving will decrease by RBO atin income level of zero. The consumption function does not contain information about the actual income level cussion 16 anco00 out of 100, Which ofthe following isan assumption ofthe simple Keynesian model? 2. Spending isthe driving force that determines the evel af economic activity. b. Prices and wages are determined in the Keynesian model x The model consists of government and the foreign sector. . Money supply and interest rates are endogenous in the model ‘According to the simple Keynesian model, spending isthe diving force that determines the evel of economic activity. The simple Keynesian model does not consist of government and the foreign sector and cannot be used to study financial markets and monetary policy. The ‘effects ofthese other sectors are excluded inthis model. Refer to section 62 and box 6-1 ofthe prescribed textbook hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 1322 914/22, 5:32 M ‘Assessment 2: Attempt review aueston 17 comet Mai 1.00 out of 120 MeN Dashboard / Courses / UNISA / 2022 / Semester? / ECS160-22-52 / Online assessments / Assessment 2 a that savings may be zero ifthe population is lazy. b. the level of autonomous consumption is independent of the level of income. v «that autonomous consumption i an upward sloping curve, 4. that consumption depends primarily upon the level of business investment, «that households consume more when exchange rates are high ‘Consumption spending is divided into two components, namely an autonomous component which is independent of income and an induced component which is determined by the level of income, axesion 18, comet ares 00 out F190, Which ofthe following is a determinant of investment? level of national income: b. cost of capital goods v savings taxation ‘The cost of capital goods isa determinant of investment. The cost of capital goods is compared to the expected revenue (and profi) to be ‘generated rom them. By capital goods, we refer to machinery and equipment needed for procucing goods and services, ‘The higher the expected retum (revenue and profi), the greater the level of investment will be. Taxation is deducted from the retums on ‘apital goods. In other words, taxes are deducted from the profits generated by capital goods, n some cases, when taxes are very high, they may discourage investment in the local economy. This results in people looking outside the domestic economy to invest in ather counties Savings ae the portion of income that isnot spent on consumption. It is denoted as $ = Y ~C, meaning that savings are the income left ‘over after spending on consumption. However, thee is no quarantee that a portion of savings will be used for investment spending, Savings ‘also do not serve asa guide tothe expected return on investment: In the Keynesian model, investment spending is independent ofthe level ‘of national income. Therefore itis autonomous with the level of total income inthe economy. hitpssimymodules dis. unis, ae zalmodiquizreview php allerpt=5222045&emid=213761 sare 914/22, 5:32 M ‘Assessment 2: Attempt review aueston 19 MeN Dashboard / Courses / UNISA / 2022 / Semester? / ECS1601-22-52 / Online assessments / Assessment 2 ») Consumption is negative even ifincomeis zero. ‘9 When income increases, consumption decreases, but the decrease in consumption is less than the increase in income «6 Consumption decreases as income increases {2} Consumption s postive even ifincome is zero. aaande baande ebcande daandd Consumption consists of autonomous consumption (())“and induced consumption (¥)~ see section 63. Autonomous consumption ifthe income level is zer. Thus, statement bis remains the same regardless of the income level and ths isthe level consumption will be incorrect and statement e is correct. Induced consumption increases when income increases, thus ais correct and c and d are incorrect. vesron 20 When aggregate spending is greater than income, inventories wil rise b. unplanned inventory adjustment wll remain the same. the total amount of production in the economy is greater than the total amount of spending. 4. the total amount of production in the economy is the same as the total amount of spending «inventories wil fl When A > ¥, there will be excess demand as spending exceeds income. Consequently, the economy will dissave and reduce inventories, Inventories will ise when A

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