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 5. Which of the following statements about stock and flow variables is/are true? a) Interest earned is a flow variable. b) The number of people who enter the unemployment pool is a stock variable. [1] both a and b are correct [2] only b is correct [3] a is correct and b is incorrect [4] both a and b are incorrect 3 6. Given the following information in the table, which option is correct? Coins R60 000 Notes R150 000 Demand deposits R300 000 Quasi money R400 000 M3 2 000 000 Long-term deposits [1] Long-term deposits are equal to R1 090 000 [2] M1 is R210 000 [3] Cash is R150 000 [4] M2 is R610 000 7. We can expect that the amount of money that a bank create will decrease when... [1] more bank clients choose to deposit their funds at the bank. [2] the bank's clients choose to hold a smaller part of their money in the form of cash. [3] the bank borrows from the South African Reserve Bank. [4] the South African Reserve Bank increases the repo rate.10. 11. Use the following figure. which shows the demand for money curves, to answer question 8. L1 Suppose there is an increase in the total remuneration earned by the factors of production. How this will influence the demand for money? ['I] The demand for active balances will increase and shift L2 to the right. [2] The demand for transaction purposes will increase and shift L1 to the right. [3] The demand for passive balances will decrease and shift L1 to the left. [4] Speculative demand for money will decrease and shift L2 to the left. Which of the following statements concerning money is correct? ['I] The value of money is not based on the confidence that both government and monetary authorities will be able to control the supply to achieve stability and that the purchasing power does not fall. [2] Paper money was developed since specialisation between countries led to increases in trade, causing the use of coin to be inconvenient as this was difficult to handle and not safe to transport. [3] Credit cards are money because they function as a medium of exchange. [4] Electronic money is another form of money as it can be used as a means of payments. Which of the following statements is incorrect regarding the quantity of money? ['I] The quantity of money is determined by the interaction of the demand for money and interest rate. [2] If the interest rates are high. the quantity of money demanded will tend to low. [3] If interest rates are low. the quantity of money demanded will tend to be high. [4] There is a positive relationship between interest rates and the quantity of money demanded. CONFIDENTIAL Page 5 of 20 ECS1610 Manyune 2020 Which of the following could be expected when the government applies a contractionary fiscal policy? ['I] a decrease in the tax rate [2] a decrease in the interest rate [3] an increase in government spending [4] a decrease in the budget deficit
