Macroeconomics 1st year [University] Notes [ECO10B]
ECS1501 Assignment 04 semester 01 2023 Exam (elaborations) ECS1501 - Economics IA Economics for South African Students, ISBN: 9780627033421
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University of South Africa (Unisa)
ECS 1601 (ECS1601)
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9/26/22, 10:02 AM Assessment 4: Attempt review
Started on Friday, 23 September 2022, 12:05 PM
State Finished
Completed on Monday, 26 September 2022, 9:59 AM
Time taken 2 days 21 hours
Marks 14.00/16.00
Grade 87.50 out of 100.00
Question 1
Correct
Mark 1.00 out of 1.00
Given the following information for a small open economy: C = R1 000 + 0,2Yd, The government spending is R300, The proportional tax
rate is 28%, Exports are R100, Z = R20 + 0,1Y, and Investment is R200.
Calculate the multiplier and equilibrium level of income.
a. 1,05 and R1 659 respectively
b. 1,32 and R2 086 respectively
c. 1,85 and R2 923 respectively
d. 1,60 and R2 528 respectively
To calculate the multiplier: α = 1/[1-c(1-t) + m] = 1/[1-0,2(1-0,28) + 0,1] = 1,05. To calculate the equilibrium level of income: Ye = multiplier
x autonomous spending Ye = 1,05 x R[1 000 + 300 + 200 + 100 - 20] = 1,05 X R1 580 = R1 659.
Question 2
Correct
Mark 1.00 out of 1.00
Assuming an open economy with both government and foreign sector, use the following information to answer the question.
Consumption spending increased from R3 750 to R5 700, and income increased from R5 000 to R7 600 in normal terms.
t = 0.20
m = 0.12
His marginal propensity to consume is….. (round to 2 decimals)
a. 0.75
b. 0.80
c. 0.25
d. 0.52
Please see pages 115 and 116 of the prescribed book. The marginal propensity to consume (c) is the ratio between a change in
consumption spending and the change in income. It shows the proportion of additional income that will be spent on goods and services. It
is calculated as follows: c = ∆C/∆Y = (5700-3750)/(7600-5000) = 1950/2600 = 0.75
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