Assignment 01 (semester 2)

Assignment 01 Unique number 730716 Closing date 30 August 2021

Content Learning units 1 and 2 of the Study Guide and the relevant chapters of the prescribed book Questions 46 questions Weight 20% of the semester mark To submit Through myUnisa or on a mark-reading sheet

Which of the following is not one of the main macroeconomic policy objectives?

full employment budget deficit equitable distribution of income balance of payments stability

Which one of the following is a macroeconomic statement?

The gross profits of all South African businesses were measured and calculated to have increased more last year than the year before The Spar Group's profit increased in 2012 The productivity of ZZ2 employees increased in 2012 The price of beef will increase as the supply of beef falls

Which one of the following is not the purpose of economic theory?

it serves as an underpinning for formulation and analysis of economic policies economic theory aims to predict changes in economic conditions and its impact on overall economy economic theory explains how the real economy functions economic theory aims to capture every detail of a phenomenon under study

Spending in the economy comes from ...

land, firms, consumers and government. households, firms, government and foreign sector. foreign sector, capital and entrepreneur. government, labour, firms, and households.

Which one of the following statements on the remuneration of the factors of production is true?

the income for labour is rent the income for capital is profit the remuneration for natural resources is rent the income for entrepreneurship is interest

South Africa is an open economy. Therefore, the South Africa gross domestic product formula is written as ...

GDP = C + I + G GDP = C + I + G + (X - Z) GDP = C+G+I+(X+Z) GDP = C+I

Which of the following statements is correct regarding factor markets in South Africa?

households offer factors of production and receive income firms buy goods and services firms offer factors of production households buy factors of production

Which one of the following is a factor of production?

money a bank loan machinery government

The two basic participants in the economy of South Africa are ...

free and controlled markets. households and firms. factor market and goods market. capital goods and consumer goods.

In the circular flow of economic activity without government and foreign sector, goods and services flow via ...

factor markets from households to firms. goods market from households to firms. factor market to goods market. goods market from firms to households.

The South Africa labour market is an example of a ...

factor market. goods market. foreign exchange market. financial market.

Which one of the following statements is a leakage from the circular flow of income and spending in South Africa? Defence expenditure by South African government, via contracts with local military. The export of fruits to the European Union. A decision by a major supermarket chain to sell beer produced in Denmark. Investment by South African Breweries in a new brewery in South Africa.

The price stability objective implies ...

there should not be price increases in the economy. prices should be determined by forces of demand and supply. prices should always stay constant. keeping inflation as low as possible.

When wealth is held in the form of money it functions as ...

a store of value only. a medium of exchange and store of value. as a unit of account. as a medium of exchange only.

Which statement is correct with regard to money?

during inflation it is advantageous to keep wealth in the form of money money is an asset that earns return for the holder money is the same as income and wealth money is anything that is generally accepted for settlement of debt

Which of the following regarding money is correct?

A cheque is another form of money as it can be easily transferred from one person to another. Money consists of notes and coins only. When an individual facilitates payment for a transaction using a credit card, they acquire a short-term loan from a bank, which is a liability and must be paid. When someone uses a debit card to make payments, the individual does not pay immediately but the bank pays.

Which of the following statements is/are correct?

In inflationary times the function of money as a store of value is undermined. An individual's income will always be equal to the amount of money he or she possesses. The most basic function of money is that it serves as a medium of exchange.

All the statements are correct. a and b a and c b and c a

M3 is a reflection of the function of money as a ...

medium of exchange and as a store of value. unit of account. medium of exchange only. store of value only.

Which one of the following is correct with regard to money in South Africa?

M2 consists of coins, notes and medium- and long-term deposits M1 consists of notes and coins and is a broader measure of money cash that is held at the Nedbank's vaults is part of money in circulation outside the monetary sector demand deposits can be transferred from one person to another, and can be used in payment of good and services

Use the following diagram to answer question 1.20.

SAVERS BORROWERS

Households

Firms

Financial Intermediaries

Firms

Government

Households

1.20. Which one of the following best explains the diagram above?

Households are the deficit unit and they sell securities to surplus units The financial intermediaries are the link between the surplus units and the deficit units in the economy of South Africa the public sector (government) represents a surplus unit When the surplus units transfer funds to the deficit units it is referred to as indirect financing

Which one of the following statements about financial intermediaries is correct?

The financial intermediary does not act as a link between lenders and borrowers. Interest rate on a transaction is only charged when indirect financing takes place. A contract is compiled when a surplus unit provides funds directly to a deficit unit or indirectly to a financial intermediary. Deficit units can receive funds from the surplus units through the financial intermediaries only.

The amount of money that individuals wish to hold for active balances is determined by ...

real income and interest rate. price level and interest rate. real income. price level and interest rate.

Which one of the following statements regarding demand for money is incorrect?

As the interest rate decreases, the quantity of money demanded will increase The repo rate is the rate at which other banks borrow from the SARB The price level does not influence the quantity of money There is a negative relationship between real income and demand for active balances

Use the following figure to answer question 1.24. i L1 0 M

The figure above illustrates the relationship ...

real income and the demand for active balance. the interest rate and demand for active balance. the repo rate and speculative demand for money. price level and demand for passive balance.

If the government decides to increase the personal income tax, the quantity of money in the economy will (ceteris paribus), ...

decrease. remain the same. cannot be determined. increase.

The South African Reserve Bank uses to influence the money stock in the economy of South Africa.

the personal income tax rate the level of interest rate government spending the income level

Which one of the following statements about money is correct?

Banks create money by borrowing from the central bank The quantity of money in an economy is determined by the interaction between money supply and demand for money A change in the interest rate will cause a shift of the money demand curve The process of money creation by banks is limited by the quantity of loans demanded by economic participants

Which one of the following is not a function of the central bank of South Africa?

Implementing expansionary monetary policy to raise money supply in the economy Provide credit facility to the government/grants credit to the public sector Regulation of price changes in the competitive market The central bank acts as a lender of last resort to other banks, where it grants loans to banks that are experiencing a shortage of funds

The formulation of exchange rate policy forms part of the South African Reserve Bank's

formulation and implementation of monetary policy. service to the government. maintenance of financial stability. provision of economic and statistical services.

In South Africa the general interest rates are determined by ...

The South African Reserve Bank. The South African government. The interaction between demand for money and supply of money. The South African Revenue Service.

As part of our drive to improve our service, we need to get a clearer picture of our student profiles. To this end, can you kindly answer questions 1.31 to 1.46. These questions do not have correct or incorrect answers.

How do you usually access the internet for studying purposes?

laptop computer smart phone tablet I do not have access.

Where do you usually access the internet from for studying purposes?

from work from home from someone else's home from the Unisa computer laboratory other means

How much of your data bundle do you have available for studying purposes per month?

I have unlimited access to the internet. less than 500 MB. between 500MB and 1GB. between 1GB and 2GB. more than 2GB.

The sections of the learning units, which I had to study to complete this assignment, ...

helped me work through the prescribed textbook systematically. did not help me understand the study material in the textbook better. were totally irrelevant to the assignment questions. I did not use the learning units at all, although I had access to them. I have not received a study guide.

Indicate the value that the Self-Assessment on myUnisa added during your completion of this assignment.

It was very helpful. It was fairly helpful. It did not add any value. I did not use it. I did not use it, as it is not part of the prescribed material.

Indicate the value that the Activity questions in the study guide added during your completion of this assignment.

It was very helpful. It was fairly helpful. It did not add any value. I did not use it. I did not use it, as it is not part of the prescribed material.

Did you make use of other online resources apart from myUnisa?

Yes. No, because I do not have access to the internet. No, as it is costly to use the internet. No, because the printed study material was sufficient for me to understand the work. No, because I did not have the time to do it.

Concerning the module website on myUnisa,...

I am not aware of the website. I am aware of the website, but I have not visited it. I visited the website once, but did not find it helpful. I visit the website regularly and find it helpful. I visit the website only when I receive an announcement that something new has been posted.

Which one of the following best describes your use of the e-tutor site on myUnisa?

I did not visit it at all. I only visited it once or twice. I visited it occasionally. I visited it regularly. I visited it extensively.

Concerning the Discussion Forum on the e-tutor webpage on myUnisa:

I am not aware of the Discussion Forum. I am aware of the Discussion Forum, but do not use it. I visited the Discussion Forum at least once, but did not find it interesting. I visit the Discussion Forum regularly and take part. I would like to take part in the Discussion Forum, but do not know how to.

Which one of the following best describes your experience with the services of the e-tutor?

I find the services extremely helpful. I find them fairly helpful. I find them helpful. I did not find them very helpful. I did not find them helpful at all.

Which of the following describes your experience with the Power Point slides for each learning unit, which are supplied on myUnisa, best?

I am not aware of the Power Point slides. I am aware of the slides, but I have not used them. I am aware of the slides and have used them sometimes. I am aware of the slides and use them regularly.

Which of the following describes your experience with the Power Point slides for each learning unit, which are supplied on myUnisa, best?

I find the slides extremely helpful. I find them fairly helpful. I find them helpful. I did not find them very helpful. I did not find them helpful at all.

Which of the following describes your experience with the quiz for each learning unit, which is supplied on myUnisa, best?

I am not aware of the quizzes. I am aware of the quizzes, but I have not used them. I am aware of the quizzes and I have used them sometimes. I am aware of the quizzes and use them regularly.

Which of the following describes your experience with the quiz for each learning unit, which is supplied on myUnisa, best?

I find the quizzes extremely helpful. I find them fairly helpful. I find them helpful. I did not find them very helpful. I did not find them helpful at all.

Do you attend the tutor classes offered at the learning centres?

Yes, the tutorials helped me to understand the work better. Yes, but the tutorials did not help me. No, I prefer to work by myself. No, there is no tuition available for this module at the learning centre closest to me. No, for any other reason.

Assignment 02 (semester 2)

Assignment 02 Unique number 731507 Closing date 06 September 2021

Content Learning units 3 to 5 of the Study guide and the relevant chapters of the prescribed book Questions 30 questions Weight 20% of the semester mark To submit Through myUnisa or on a mark-reading sheet

Which of the following does not form part of the general government?

South African Airways (SAA). Gauteng department of education. Tshwane district hospital. Department of international relations.

Government intervenes in the economy to...

create market failure. determine how goods and services are distributed. control what markets should produce and for whom they should produce for. produce private goods and services that cannot be produced by the private sector.

Which of the following is incorrect regarding the National budget?

It is presented by the Minister of Finance. It is an instrument of monetary policy. It is presented annually. It is an instrument of fiscal policy.

Which one of the following can lead to government failure?

A decision by the government to decrease proportional income tax. A decision by the South African Reserve Bank to applying expansionary monetary policy. Provision of public goods. A municipal councillor's decision to hire more unproductive workers to attract votes.

Which one of the following statements on nationalisation and privatisation is correct?

Nationalisation is the transfer of ownership from the public sector to the private sector. Privatisation is the transfer of ownership from private enterprise to government. One of the arguments in favour of privatisation is that the privatised firm may attract foreign direct investment. Commercialisation is the same as privatisation.

If the government wishes to stimulate economic activity by using fiscal policy, it should...

increase interest rate. decrease interest rate. decrease government spending. decrease taxation.

Government can finance its spending by ...

Selling its enterprises to private individuals. Decreasing taxes. Nationalizing private firms. Paying off its public debts.

The electronic filing (eFiling) system of the South African Revenue Service is an example of dealing with in a tax system.

Neutrality Equity Administrative simplicity Indirect taxes

Lungelo earns an income of R10 000 a month and pays R1 100 towards income tax, and when her income increases to R12 000 a month, she now pays R1 200 towards income tax. This in an example of a ...

progressive tax. regressive tax. proportional tax. flat tax.

Which of the following is correct regarding the fuel levy?

It is a progressive tax. It is a general tax. It is a direct tax. It is an indirect tax.

The law of absolute advantage states that ...

nations trade because of similarities in exchange rates. two countries can benefit from trade even if one country is more efficient at producing everything. countries can only benefit from trade if the opportunity costs among the trading countries are the same. absolute advantage is a prerequisite for international trade.

Consider the following table, which shows the production possibilities of the two countries A and B, and answer questions 2.12 and 2.13

Cellphones Cars Country A 270 80 Country B 90 40

Which one of the following statements is correct?

Country A has an absolute advantage in the production of cellphones, and a comparative advantage in the production of cars. Country B has an absolute advantage in the production of cars, and a comparative advantage in the production of cellphones. Country A has an absolute advantage in the production of cars, and a comparative advantage in the production of cellphones. Country B has an absolute advantage in the production of both cellphones and cars, and a comparative advantage in the production of cars.

It would be more efficient for country B to export ...

cars. both cellphones and cars. cellphones. none of the two goods.

The suspension of exports from South Africa to the European Union in response to the outbreak of swine flu in the inland rural areas of South Africa can be classified as ...

a tax imposed on such imports. exchange control. a non-tariff barrier. an import quota.

The trade balance is the difference between ...

the value of goods exported and goods imported. the value of goods and services exported, and goods and services imported. the current account and financial account. direct investment and portfolio investment.

If foreign investors purchase Sasol shares from the Johannesburg Stock Exchange (JSE), this will be recorded as in the balance of payments.

net direct investments net portfolio investments net other investments net financial derivatives.

Use the information below to answer questions 2.17 and 2.18.

Suppose the rand price of the US dollar (USD) increases from R 11.00 to R13.00.

This implies that the US dollar has against the rand.

appreciated depreciated decreased Cannot be determined with the available information.

Based on your answer to question 2.17, which of the following statements is correct?

The price of imported goods in South Africa will decrease. The price of South African products sold in the USA will increase. The price of petrol in South Africa will drop. The number of tourists from South Africa visiting the USA will decrease.

Use the diagram below to answer questions 2.19 and 2.20.

S E2 E1 D R/$

R/$2

R/$1

D'

0 Q of dollars

The shift from D to D' represents ...

the rand is not affected by the shift. appreciation of the rand against the US dollar. appreciation of the US dollar against the rand. depreciation of the US dollar against the rand.

Which one of the following is most likely to have caused the rightward shift of the demand curve on the South African foreign exchange market?

a rise in interest rates in the United States an expected decline in the value of the rand relative to the dollar a recession in South Africa a decrease in international tourism

If we say that GDP = C + I + G + X - Z, then GDP has been measured using the...

expenditure method. production method. income method. value-added method.

The expression "GDP minus net primary income payments to the rest of the world" defines ...

the consumer price index. the gross national product. gross domestic expenditure. net national income.

Which one of the following is not recorded in the current account of the balance of payments?

service receipts merchandise imports net other investments net gold exports

Which one of the following is an example of intermediate goods?

machine in manufacturing plant fabric used for a shirt loaf of bread car

The three ways of calculating GDP are ...

production, prices and income methods.

income, product and service methods.

expenditure, spending and production methods.

income, expenditure and production methods.

Use the following figures showing the GDP for 2018 and 2019, which were obtained from the SARB Quarterly Bulleting for March 2019, to answer questions 1.26 and 1.27.

2018 2019

R million GDP @ current prices 5 826 912 6 421 962 GDP @ constant prices 4 923 456 5 235 746

What is the percentage increase in real GDP from 2018 to 2019?

[1] 10.21% [2] 9.26% [3] 5.96% [4] 6.34%

Given that total production remained unchanged, what does a change in nominal GDP from 2018 to 2019 represent?

economic growth increase in unemployment current account deficit inflation

Use the following figures showing the CPI for 2017 to 2019, which were obtained from the March 2020 edition of the SARB Quarterly Bulletin, to answer question 2.28.

Year CPI Base year is 2016 2017 107. 5 2018 112.1 2019 114.8

The inflation rate for 2019 is ...

[1] 4.10% [2] 4.27% [3] 2.35% [4] 2.4%

When inflation accelerate, nominal GDP increases real GDP.

at the same rate as faster than slower than sometimes faster, sometimes slower, and sometimes at the same rate as

Which of the following is/are measurements of income inequality?

income ratio quantile ratio the Lorenz curve and Gini coefficient

a and b a and c b and c All the statements are correct.

Assignment 03 (semester 2)

Assignment 03 Unique number 648154 Closing date 17 September 2021

Content Learning units 6 to 8 of the Study Guide and the relevant chapters of the prescribed book Questions 30 questions Weight 30% of the semester mark To submit Through myUnisa or on a mark-reading sheet

In the aggregate expenditures model, the size of the marginal propensity to consume (MPC) is assumed to always be ...

an amount less than zero. an amount greater than zero, but less than one. one. greater than one.

In the Keynesian model, GDP is determined by ...

level of taxes. price level. level of aggregate spending. level of aggregate supply.

A decrease in the marginal propensity to consume ...

does not affect the value of the multiplier. raises the value of the multiplier. lowers the value of the multiplier. decreases the marginal propensity to save.

In the simple Keynesian model, total spending is the sum of ...

savings plus investment. consumption plus disposable income. consumption plus investment. consumption plus savings.

At points above the 45 line in the aggregate spending function diagram...

aggregate expenditure is in equilibrium. aggregate spending is less than GDP. aggregate spending is greater than GDP. aggregate spending is equal to GDP. Use the figure below to answer question 3.6. A' A E1 E0 45 Y A

0

Which one of the following factors may have caused the upwards shift of the aggregate spending curve from A to A'?

a decrease in consumption a decrease in investment an increase in marginal propensity to consume increase in investment

Which one of the following statements is incorrect regarding the Keynesian model with the government and foreign sector?

The change in the level of exports is dependent on the exchange rate, among others. The change in the level of imports is dependent on the level of domestic income. An increase in the marginal propensity to import would increase imports. The greater marginal propensity to import is, the bigger the multiplier.

How is the multiplier affected by a decrease in leakages from the Keynesian model with a government?

it decreases it increases no change multiplier is not affected

In the Keynesian model, if inventories start to decrease, it could be a signal that ...

aggregate spending is greater than total output and businesses should decrease output. aggregate spending is greater than total output and businesses should increase output. aggregate spending is less than total output and businesses should decrease output. aggregate spending is less than total output and businesses should increase output.

In the Keynesian model with a government and foreign sector an increase in government spending ...

decreases the equilibrium level of income and imports. increases the equilibrium level of income and decrease imports. increases the equilibrium level of income and imports. increases both exports and imports.

Which of the following factors will not affect the size of the multiplier?

marginal propensity to consume investment spending marginal propensity to import tax

What is the aggregate spending equation if the saving function is S = -1000 + 0.25Y and autonomous investment spending is 100?

[1] A = 1000 + 0.25Y [2] A = 1000 + 0.75Y [3] A = 1100 + 0.25Y [4] A = 1100 + 0.75Y

Which one of the following statements is correct given that C= 400 + Y and income level is 1000?

total consumption is R 400 total consumption is R1150 aggregate spending is R 1000 marginal propensity to save is 0.75

In the simple Keynesian model with no government and foreign sector, if an increase in income of R200 million results in an increase in consumption of R100 million, it follows that the marginal propensity to consume must be ...

[1] 0.25 [2] 0.2 [3] 0.5 [4] 0.75

Use the information below to answer questions 3.15 to 3.18.

Autonomous consumption = R 3000 Autonomous investment = R 7000 Marginal propensity to consume c =

The marginal propensity to save is ...

[1] 2/4 [2] 4/1 [3] 1/4 [4] 0.75

Autonomous spending is ... [1] R10000 [2] R3000 [3] R7000 [4] R4000

The value of the multiplier is ...

[1] 4 [2] 2 [3] 1.33 [4] 1

The equilibrium level of income is ...

[1] R10000 [2] R 20000 [3] R 7500 [4] R40000

In the Keynesian model, the introduction of government spending would ...

increase aggregate spending and leave the equilibrium level of income unchanged. increase aggregate spending and the equilibrium level of income. decrease aggregate spending and increase the equilibrium level of income. decrease aggregate spending and leave the equilibrium level of income unchanged.

In the Keynesian model, the appreciation of the rand against the dollar would result in ...

an increase in aggregate expenditure. an increase in net exports. a decrease in the equilibrium level of income. an increase in the equilibrium level of income.

Which one of the following statements regarding the Keynesian model is correct?

An increase in proportional tax will swivel the aggregate spending curve upwards. Disposable income is always greater than total income. Taxes reduce total expenditure. Proportional tax will increase induced consumption spending.

Which of the following is correct about imports in the Keynesian model with a government and the foreign sector?

Induced imports are dependent on income. Induced imports increases the value of the multiplier. Autonomous imports increase aggregate autonomous expenditure. Net exports are positive when imports are greater than exports.

Use the figure below to answer question 3.23. A 45 Y A

A'

0

The movement from A to A' can result from ...

an increase in net exports. a decrease in net exports. a decrease in taxes. an increase in marginal propensity to import.

In the Keynesian model, expansionary fiscal policy will result in a(n) ...

increase in inventories. decrease in total income. increase in total spending. decrease in the value of the multiplier.

Which one of the following authorities is responsible for fiscal policy in South Africa?

The South African Reserve Bank (SARB) The National Treasury South African Revenue Services (SARS) Statistics South Africa (STATSSA)

In the Keynesian model, an increase in interest rates will result in ...

a downward movement along the investment curve. an upward shift of the aggregate spending curve. a downward shift of the aggregate spending curve. a leftward shift of the money market curve.

Use the information below to answer questions 3.27 to 3.30. Autonomous consumption = R1000 Autonomous investment = R5000 Autonomous government spending = R20000 Net exports = R4000 Marginal propensity to consume = 0.7 Tax rate = 25% Autonomous spending is ... [1] R25000 [2] R26000 [3] R22000 [4] R30000

The value of the multiplier is ...

[1] 3.33 [2] 2.1 [3] 1.33 [4] 1

The equilibrium level of income is ... [1] R39900 [2] R30000 [3] R63000 [4] R99900

If the tax rate rises to 30% and government spending rises to R25000, ceteris paribus, what is the new equilibrium income?

[1] R63000 [2] R63400 [3] R70000 [4] R68600

Assignment 04 (semester 2)

Assignment 04 Unique number 735797 Closing date 30 September 2021

Content Learning units 9 to 12 of the Study guide and the relevant chapters of the prescribed book Questions 45 questions Weight 30% of the semester mark To submit Through myUnisa or on a mark-reading sheet

The aggregate demand curve shows ...

the inverse relationship between the aggregate real expenditure on goods and services and the price level. the positive relationship between the aggregate expenditure in the economy and the price level. the various levels of real production or output that will be supplied at different price levels. the relationship between aggregate spending on goods and services and the price level.

The aggregate supply curve shows ...

the relationship between total output and the price level. the inverse relationship between real GDP and the price level. the levels of total expenditure at various price levels. the relationship between the quantity supply and price of a good or service.

Questions 4.3, 4.4 and 4.5 are based on the following diagrams, which show the aggregate demand and supply curves.

Which one of the diagrams above illustrates the effects of the contractionary fiscal and monetary policies?

figure 1 figure 2 figure 3 figure 4

Which of the following best demonstrate a movement that would result from the social relief grants offered to households that were negatively affected by the COVID-19 induced lockdown?

b to c on figure 3 a to c on figure 4 b to c on figure 2 b to c on figure 1

The effect of the decision by the South African Reserve Bank (SARB) to decrease the repo rate is shown by ...

figure 1 figures 1 and 2 figure 3 figures 2 and 4

When the SARB decreases the interest rates, investment spending will increase, which will lead to an increase in aggregate spending and aggregate demand in the economy. This chain of events is called ...

fiscal policy transmission mechanism. monetary policy transmission mechanism. transmission mechanism of contractionary monetary policy. transmission mechanism of contractionary fiscal policy.

A decrease in the interest rate leads to an increase in investment spending, increase in aggregate spending and an increase in total production or income. This chain of events may be summarised as follows, in symbols,

[1] [2] [3] [4]

According to the classical cash reserve system, which of the following statements is/are true regarding banks in South Africa?

They are required to hold a minimum cash reserve of 2,5% of their deposits. The level of the repo rate influences the interest rate at which the banks provide credit to individuals. The SARB provides cash reserves through accommodation policy to the banks experiencing liquidity shortage.

a b c a and b a, b and c

Contractionary demand management policies tend to ...

decrease real GDP and increase the price level. increase the price level and decrease real output. increase both inflation and the level of unemployment. decrease the real GDP and the price level.

In South Africa, monetary policy refers to and is implemented by , while the fiscal policy refers to and is applied by .

a change in the repo rate; SARB; a change in government spending and/or taxes; the ministry of finance. a change in the repo rate; the ministry of finance; a change in government spending and/ or taxes; SARB. a change in government spending and/or taxes; SARB; a change in the repo rate; the ministry of finance. a change in government spending and/ or taxes; the ministry of finance; a change in the repo rate; SARB.

Expansionary fiscal policy is applied when the .

central bank raises the interest rate central bank reduces the interest rate government decreases spending government decreases taxes

Question 4.12 is based on the following table showing the CPI in South Africa, 2016-2020.

Year Jan Feb Mar Apr May Jun Jul

Aug Sep Oct Nov Dec Average 2016 94,4 95,7 96,4 97,2 97,4 97,9 98,7 98,6 98,8 99,3 99,6 100,0 97,8 2017 100,6 101,7 102,3 102,4 102,7 102,9 103,2 103,3 103,8 104,1 104,2 104,7 103,0 2018 105,0 105,8 106,2 107,0 107,2 107,6 108,5 108,4 108,9 109,4 109,6 109,4 107,8 2019 109,2 110,1 111,0 111,7 112,0 112,4 112,8 113,1 113,4 113,4 113,5 113,8 112,2 2020 114,1 115,2 .. .. .. ..

.. .. .. .. .. .. ..

Source: Statistics South Africa (2020)

The average inflation rate for 2018 is ...

[1] 4,66% [2] 4,08% [3] 5,32% [4] 2,66%

Which of the following best describes the consumer price index (CPI) and producer price index (PPI)?

PPI changes are linked to the cost of living, while CPI is linked to the cost of production. An increase in PPI will lead to a decrease in CPI, while a change CPI will not affect PPI. PPI calculates the prices of goods and services, while CPI measures services only. PPI calculates the prices of goods only, while CPI excludes intermediate goods.

Which one of the following is NOT an effect of higher inflation?

Inflation redistributes wealth from the lender to the borrower. The value of existing savings decreases when inflation increase. Inflation increases net exports. Inflation increases the cost of living.

Inflation can be caused by a(n) . Within the AD-AS model, this will be illustrated by a .

rise in consumption spending; leftward shift of the AD curve fall in crude oil price; rightward shift of the AS curve high wage demands by trade unions; leftward shift of the AS curve decrease in exports earnings; leftward shift of the AD curve

The appropriate policy measure to combat inflation would be to ...

increase the repo rate. decrease taxes. increase aggregate spending. increase productivity.

In response to the COVID-19 pandemic, countries injected trillions of dollars into their economies to provide relief to households and firms. The response is an example of policy, which can result in inflation, ceteris paribus.

expansionary; demand-pull contractionary; demand-pull expansionary; cost-push contractionary; cost-push

Which of the following can cause demand-pull inflation?

A decrease in interest rates which leads to an increase in consumption and investment spending. An increase in government spending on social wealth and education. A rise in the cost of import intermediate goods due to a depreciation of the domestic currency.

a b c a and b a, b and c

Which of the following would cause the demand-push inflation?

an increase in productivity an increase in exports a decrease in the cost of production a decrease in government spending

The appropriate policy to combat cost-push inflation would be to increase , which will be illustrated by .

government spending; rightward shift of the aggregate demand curve interest rates; leftward shift of the aggregate demand curve productivity; rightward shift of the aggregate supply curve wages; leftward shift of the aggregate supply curve

Which of the following statements is/are correct regarding unemployment?

Unemployed persons include those (aged 15-64 years) who were available to work in the reference week. A person is said to have left the unemployment pool if he quits searching for job to study fulltime. The unemployment rate is measured by obtaining the proportion of the labour force that is unemployed.

a b c a b a b c

Question 4.22 is based on the following table showing the Key labour market indicators in South Africa, Q4:2018 to Q4:2019.

Oct-Dec 2018 Oct-Dec 2019

Thousand Population 15-64 yrs. 38 134 38 582 Labour force 22 668 23 109 Employed 16 529 16 375 Unemployed 6 139 6 734 Discouraged work-seekers 15 466 15 474

Source: Statistics South Africa (2020)

Which of the following is correct based on the data in the table?

Unemployment rate was 29,1% in Q4:2019. Unemployment rate was 29,1% in Q4:2018. The working-age population increased by 2,1% in Q4:2019. Employment rate was 27,1% in Q4:2018.

If Thuli quit her job as a cashier to study full time to become an economist, we may conclude that she is .

frictionally unemployed structurally unemployed not in the labour force in the unemployment pool

Suppose gold and platinum miners announce their decision to permanently close their mines in the next few months. This suggests that the number of people who are unemployed will .

cyclically; decrease frictionally; increase structurally; increase seasonally; increase

What type of unemployment would occur when there is general downturn in economic activity?

frictional unemployment seasonal unemployment cyclical unemployment structural unemployment

Suppose South Africa is experiencing structural unemployment. What will be the appropriate policy to tackle the problem?

Improve the quality of education and training to increase the number of skilled labours. Increase in government spending to support firms that are losing business due to foreign competition. Reduce interest rate and taxes to stimulate aggregate demand in the economy.

a b a and b a, b and c

Question 27 is based on the following diagram.

C B A Unemployment rate P

Inflation rate 0 u

Which of the following best describes the diagram above?

It shows that as inflation increases, unemployment decreases. It shows the positive relationship between inflation and unemployment. It is the Philips curve and it relates higher inflation with higher unemployment. It illustrates the aggregate demand curve (P).

I