23' The equation C = 75 + 0.7Y. where C is consumption and Y is disposable income. tells us that... [1] l2] l3] [41 households will consume R75 if their disposable income is zero and will consume 0,7 of any increase in disposable income they receive. households earn R75 and spend three quarters of their income. households will save R75 if their disposable income is zero and will consume 0,7 of any increase in disposable income they receive. households will consume 0. 30 of whatever level of disposable income they receive. CONFIDENTIAL Page 10 of 20 ECS1610 Mayl'June 2020 Use the information below to answer questions 28 to 30: If CF= R15 billion. | = R25 billion, c = 0.80. CY = R 980 billion 28. The marginal propensity to save is... 29. 30. 31. [1] [2] [3] [4] 'I 0.75 0,20 1,20 Consumption is... [1] [2] [3] [4] R995 billion R799 billion R211 billion R1 020 billion Saving is... [1] [2] [3] [4] R245 billion R15 billion R230 billion R260 billion Use the information below to answer questions 31 to 32: If C'= R15 billion, I = R25 billion, G = R20 billion. X = R10 billion. Z = R7 billion. and c = 0,80 The multiplier is... [1] [2] [3] [4] 3,5 32. The equilibrium level of income is... [1] R385 billion [2] R504 billion [3] R53 billion [4] R315 billion CONFIDENTIAL Page 11 of 20 ECS1610 MayiJune 2020 Use the gure below to answer question 33: 33. The movement from A to A' can result from... [1] an increase in government spending [2] a decrease in government spending [3] an increase in taxes [4] a decrease in taxes 34. Suppose autonomous imports exceeds exports. In the Keynesian model, when we add the negative net exports to C + I + G [1] the A curve shifts upwards [2] the A curve shifts downwards [3] the A curve does not shift [4] the multiplier increases 35. Nthabiseng's monthly disposable income increases from R3 000 to R3 400. As a result. her monthly savings increase from R400 to R560. This implies that her marginal propensity to consume is [1] 0.40. [2] 0.20. [3] 0.60. [4] 0.80. 10 36. 37. 38. 39. I'l'l-JI-II IE '9'." Use the figure below to answer questions 36 to 38: The upwards movement from A to A' can result from... ['I] an increase in interest rate. [2] a decrease in interest rate. [3] an increase in taxes. [4] a decrease in taxes. Which type of policy was applied in the above diagram, based on the answer for question 36? ['I] expansionary monetary policy [2] expansionary scal policy [3] contractionary monetary policy [4] contractionary fiscal policy Which one of the following South African authorities is responsible for the type of policy chosen on question 37? 12 ['|] Statistics South Africa (STATS SA) [2] Republic of South Africa's National Treasury [3] The South African Reserve Bank (SARB) [4] South African Revenue Services (SARS) CONFIDENTIAL Page 13 of 20 ECS1B10 MayIJune 2020 Suppose the economy of South Africa is experiencing rapid increase of price level. The economy is at equilibrium at an income level of R950 billion, which is above the full-employment level of income (VI) of R900 billion. The marginal propensity to consume is 0.75. If the government wishes to close the income gap and slow down the increase in the price level. it should... ['I] cut its spending by R50 billion. [2] cut its spending by R200 billion. [3] raise its spending by R50 billion. [4] cut its spending by R12.5 billion. A 40. Fiscal policy includes... a) policy on government spending on ofcial travel allowances of politicians. b) policy on consumption taxes such as those on cigarettes. c) policy on salaries paid to government employees and politicians. ['|] a and b [2] b and c [3] b [4] a. b and c 41. Within the AD-AS model, what will be the impact of expansionary demand management policy on the economy? ['I] aggregate supply will decrease and the price level increase [2] aggregate demand will decrease and the price level increase [3] total production and employment will increase, while inflation decrease [4] real output and the price level will increase, while unemployment decrease 42. Incomes policy measures tend to affect... [1] output and the level of employment in opposite directions. [2] output and the price level in the same directions. [3] the level of employment and the price level in the same directions. [4] the level of unemployment and the price level in the same directions