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Olwetu Oza

Olwetu O.

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Shu Naito verified

Numerade educator

4.2. With reference to the Keynesian model with a public and foreign sector. Assume South Africa is experiencing a recession, and the government is required to bring the economy to an equilibrium level of R3,500 billion. Suppose the aggregate expenditure is currently at R2,700 billion; the tax rate is 0.4; the marginal propensity to consume is 0.72; and the marginal propensity to import is 0.18. How much should the government spend to bring the economy to equilibrium? (7 marks)

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Question 4 (15 marks) 4.1 Refer to the following diagram and then answer questions 4.1 (i) and 4.1 (ii) below. Where: \[ \begin{array}{l} A E_{0}=C+I \\ A E_{1}=C+I+G \\ A E_{2}=C+1+G+(X-M) \end{array} \]

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Shu Naito verified

Numerade educator

Question 4 (15 marks) 4.1 Refer to the following diagram and then answer questions 4.1(i) and 4.1(ii) below. Aggregate expenditure Y = AE AE2 = 200 + (0.5(1-0.25)+0.15)Y AE2 AE1 = 200 + 0.5(1 - 0.25)Y AE1 AE0 = 200 + 0.25Y AE0 45° Output (Y) Where: AE0 = C + I AE1 = C + I + G AE2 = C + I + G + (X-M) (i) With reference to the above diagram, calculate the equilibrium level of income after the introduction of government spending and proportional income tax. Show all the steps in your calculation. (5 marks) (ii) With reference to the above diagram, if national income (Y) is R750 billion, calculate

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3.2. Refer to the following table to answer the question that follows: ECS1601 | Assessment 07 practice| Semester 2, 2024 Page 3 of 5 UNISA Table 1: Ethiopia Consumer Price Index \( (2010=100) \) \begin{tabular}{|l|l|l|l|l|l|l|l|l|l|l|l|l|l|} \hline Year & Avg. & Jan & Feb & Mar & Apr & May & Jun & July & Aug & Sep & Oct & Nov & Dec \\ \hline 2019 & 322.52 & & & & & & & & & & & & \\ \hline 2020 & 388.17 & & & & & & & & & & & & \\ \hline 2021 & 492.36 & 414.77 & 431.36 & 444.81 & 448.40 & 458.264 & 490.10 & 507.36 & 525.74 & 546.59 & 546.59 & 543.23 & 551.08 \\ \hline 2022 & 659.22 & 557.58 & 576.19 & 599.28 & 612.28 & 628.65 & 656.90 & 677.08 & 696.81 & 714.29 & 720.12 & 734.02 & 737.39 \\ \hline \end{tabular} Source: International Monetary Fund Calculate the annual inflation rate for November 2022. Show all calculation steps. \( (2 \) marks)

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Question 3 (10 marks) Maximum word count: 200 words 3.1. Read the following news extract and answer the question below. News Extract 3 South Africa has experienced a significant increase in food inflation, with the cost of food and non-alcoholic beverages rising by 14% year-on-year in March 2023. The highest inflation was seen in categories such as vegetables, bread & cereals, oils & fats, and dairy & eggs. Despite global decreases in food commodity prices as indicated by the FAO Food Price Index, domestic food prices have not eased due to factors like a weak exchange rate, rising fuel prices, and severe electricity load shedding. For full article visit website: South African Food Inflation Soars, Relief Expected in Second Half of 2023 | Rateweb - South Africa [Access date 17 October 2023] You are an economic adviser to the South African Reserve Bank and Minister of Finance. With reference to News Extract 3, you have been asked to advise both institutions on the following: (i) the type of inflation that is likely to be triggered and why (Also explain the influence of this inflation on the distribution of income and wealth among economic participants.) (ii) the appropriate steps to address the inflation.

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Question 3 (10 marks) Maximum word count: 200 words 3.1. Read the following news extract and answer the question below. News Extract 3 South Africa has experienced a significant increase in food inflation, with the cost of food and non-alcoholic beverages rising by 14% year-on-year in March 2023. The highest inflation was seen in categories such as vegetables, bread & cereals, oils & fats, and dairy & eggs. Despite global decreases in food commodity prices as indicated by the FAO Food Price Index, domestic food prices have not eased due to factors like a weak exchange rate, rising fuel prices, and severe electricity load shedding. For full article visit website: South African Food Inflation Soars, Relief Expected in Second Half of 2023 | Rateweb - South Africa [Access date 17 October 2023] You are an economic adviser to the South African Reserve Bank and Minister of Finance. With reference to News Extract 3, you have been asked to advise both institutions on the following: (i) the type of inflation that is likely to be triggered and why (Also explain the influence of this inflation on the distribution of income and wealth among economic participants.) (ii) the appropriate steps to address the inflation. 8 marks

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Farruh Turgunov verified

Numerade educator

2.2. Describe how the changes in the economy of Saudi Arabia, as described in news extract 2B, influence the foreign exchange market of a developing country like South. Africa, where Saudi Arabia is now a trading partner. Include a diagram in your answer. (6 marks) News extract 2B The Saudi Arabian government has lifted a 21-year ban on South African meat imports. On Thursday, the Saudi Food and Drug Authority (SAFDA) said it would lift the ban that has been in place on meat and red meat imports since 2002 after it held successful inspections in South African abattoirs and feedlots in June. The inspection ensured that meat products complied with Saudi Arabian market access protocols and halal certification.

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Question 2 (10 marks) Maximum word count: 150 words 2.1. The monetary policy committee (MPC) of the South African Reserve Bank is worried, following the news of an economy in decline, as reported in News Extract 2A (below). To stimulate the economy, the MPC decided to lower interest rates by 50 basis points (0.5%). With the aid of a diagram, explain how the money market in South Africa will be affected by the changes. The direction of any changes should be clearly indicated by using arrows. (4 marks) NEWS Extract 2A South Africa’s gross domestic product (GDP) decreased by 0,2% in the third quarter of 2023. Source: Press release - Q3 2023.pdf (statssa.gov.za) [Accessed: 07 December 2023]

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Farruh Turgunov verified

Numerade educator

Suppose you live in Ethiopia and have the option to buy either Ethiopian coffee or Brazilian coffee. Use the circular flow of goods and services and the circular flow of income and spending between households, firms, government, and the foreign sector, to explain why it is better to purchase Ethiopian coffee. Also, explain the opportunity costs of buying Brazilian coffee instead of coffee produced in Ethiopia.

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Aparna Shakti verified

Numerade educator

When measuring unemployment, which of the following statements is/are true? (a) According to the strict definition, unemployed refers to persons over 15 years old who are not working or self-employed, who were available for paid employment or self-employment seven days before the interview and actively sought paid employment and self-employment four weeks preceding the interview. (b) The expanded or broad definition excludes persons who have the mere desire to find work, which implies it excludes discouraged workers. (c) There is no difference between the strict and expanded definition of unemployment. a. Only a is correct. b. Only b is correct. c. Only c is correct. d. All the options are correct. e. None of the alternatives is correct.

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