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ECS1601 ASSESSEMENT 8 OF 2024 EXPECTED QUESTIONS AND ANSWERS
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THIS DOCUMENT CONTAINS ECS1601 ASSESSEMENT 8 OF 2024 EXPECTED QUESTIONS AND ANSWERS.USE IT CORRECTLY FOR PRACTICE AS A GUIDE
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Started on Thursday, 7 November 2024, 2:09 PMState Finished
Completed on Thursday, 7 November 2024, 2:35 PM
Time taken 26 mins 7 secs
Marks 27.00/29.00
Grade 9.31 out of 10.00 (93.1%)
Question 1 Which one of the following statements describe a leakage from the circular flow of income and spending in South
Correct Africa?
Mark 1.00 out
of 1.00 Select one:
Flag a. Investment by a Lesotho beer company in a new brewery in South Africa
question
b. Defence expenditure by South African government, via contracts with local companies.
c. The sale of fruit exports to the European Union
d. A decision by a major supermarket chain to sell chicken from Brazil
Question 2 Within the mixed economy, _____________.
Correct
Mark 1.00 out Select one:
of 1.00 a. households and firms depend on each other to generate their income
Flag
question b. households produce factors of production
c. firms generate income from the factor market
d. both households and firms are directly involved in production
Question 3 Which of the following Will cause the demand curve of money to shift to the right?
Correct
Mark 1.00 out Select one:
of 1.00 a. a drop in the repo rate
Flag
question b. an increase in the quantity of money available
c. a decrease in the quantity of money available
d. an increase in real GDP
Question 4 An increase in the market interest rates, in general,
Correct
Mark 1.00 out Select one:
of 1.00
a. will cause the price of bonds to fall
Flag
question b. implies a lower opportunity cost of holding money balances
c. will increase the purchasing power of money
d. Will increase strikes
e. Will shift the money demand curve downwards
Question 5 Which one of the following statements on nationalisation and privatisation is correct?
Correct
Mark 1.00 out Select one:
of 1.00
a. Privately owned enterprises are often a burden on the taxpayer.
Flag
question b. One of the arguments in favour of privatisation is that the privatised firm may attract foreign direct
investment.
c. Privatisation is the transfer of ownership from private enterprise to government.
, d. Nationalisation is the transfer of ownership from the public sector to the private sector.
Question 6 Which one of the following can lead to government failure?
Correct
Mark 1.00 out Select one:
of 1.00
a. A decision by the government to decrease proportional income tax.
Flag
question b. A municipal councillor’s decision to hire more unproductive workers to attract votes.
c. Provision of public goods.
d. A decision by the South African Reserve Bank to applying expansionary monetary policy.
Question 7 Neutrality of taxes means that…
Correct
Mark 1.00 out Select one:
of 1.00 a. the tax burden is spread equally amongst taxpayers.
Flag
question b. taxes have a minimum distortionary effect on relative prices.
c. people pay taxes according to their ability to pay.
d. administration costs of a tax system are kept as low as possible.
Question 8 Using the analysis of the foreign exchange market, if the rand/dollar exchange rate is below equilibrium, this
Correct indicates that
Mark 1.00 out
of 1.00 Select one:
Flag a. there is an excess demand for dollars in South Africa economy
question
b. the rand has depreciated against the US dollar
c. there is an excess supply of dollars in the United States economy
d. the dollar has appreciated against the rand
Question 9 A sudden increase in the number of tourists from South Africa to United States (US) will lead to…
Correct
Mark 1.00 out Select one:
of 1.00 a. an appreciation of the dollar and a leftward shift of the supply of Rand curve on the US foreign exchange
Flag market.
question
b. a depreciation of the dollar and a leftward shift of the supply of Rand curve on the US foreign exchange
market.
c. a depreciation of the dollar and a rightward shift of the supply of Rand curve on the US foreign exchange
market.
d. an appreciation of the dollar and a rightward shift of the supply of Rand curve on the US foreign
exchange market.
Question 10 The rand (R) price of United States dollar ($) increased from R7 = $1 in 2010 to R14 = $1 in 2019. Based on this
Correct statement, which of the following is true?
Mark 1.00 out
of 1.00 Select one:
Flag a. The dollar has weakened.
question
b. The rand has depreciated.
c. The rand has appreciated.
d. Less units of rands are needed to buy a single unit of dollar.
,Question 11 Which of the following statements about nominal GDP is true?
Correct
Mark 1.00 out Select one:
of 1.00
a. it accounts for price changes
Flag
question b. it accounts for inflation
c. it grows when prices rise and output is constant
d. it is measured at base year prices
Question 12 Consider the following information: Marginal propensity to consume = 0,9 Investment = R200 million Autonomous
Correct consumption = R70 million The equilibrium level of income is …
Mark 1.00 out
of 1.00 Select one:
Flag a. R2 700 million.
question
b. R300 million.
c. impossible to determine from the information provided.
d. R700 million.
e. R2 000 million.
Question 13 An increase in taxation in the Keynesian model with a government sector …
Correct
Mark 1.00 out Select one:
of 1.00 a. reduces autonomous spending.
Flag
question b. increases the equilibrium level of income.
c. reduces the multiplier.
d. increases the multiplier.
Question 14 Given a consumption function C = 1 000 + 0,4Y with a proportional income tax rate of 40%, what is the multiplier?
Correct Round off your answer to two digits after the decimal.
Mark 1.00 out
of 1.00 a. 1,70
Flag
question b. 2,50
c. 2,78
d. 1,32
Question 15 Use the following information to solve the question:
Correct Total income = 40 000
Mark 1.00 out
Autonomous consumption = 10 000
of 1.00 c = 0.7
Tax rate = 0.35
Flag
question
Total consumption is…
a. 12 000
b. 18 400
c. 28 000
d. 28 200
, Question 16 Which of the following is correct about an increase in interest rate in the Keynesian model?
Correct
Mark 1.00 out Select one:
of 1.00
a. increase price levels
Flag
question b. decrease price levels
c. decrease investment
d. increase investment
Question 17 Based on the international trade effect, how would an increase in the price level in South Africa affect the exchange
Incorrect rate and aggregate demand?
Mark 0.00 out
of 1.00 Select one:
Flag a. rand will depreciate; the quantity of aggregate demand will increase.
question
b. rand will appreciate; the quantity of aggregate demand will decrease.
c. exchange rate will increase; the aggregate demand will increase.
d. exchange rate will remain unchanged; the aggregate demand will decrease.
Question 18 A decrease in the interest rate leads to an increase in investment spending, increase in aggregate spending and an
Correct increase in total production or income. This chain of events may be summarised as follows, in symbols,
Mark 1.00 out
of 1.00 Select one:
Flag a. ↑i→↓I→↓A→↓Y
question
b. ↓i→↓I→↓A→↓Y
c. ↓i→↑I→↑A→↑Y
d. ↓i→↑I→↑A→↑Y→↑AD→↑Y→↑P
Question 19 The appropriate demand management policy during a recession is ...
Correct
Mark 1.00 out Select one:
of 1.00
a. a contractionary monetary policy.
Flag
question b. a decrease in tax rates.
c. an increase in interest rates.
d. a decrease in government spending.
Question 20 According to the classical cash reserve system, which of the following statements is/are true regarding banks in
Correct South Africa?
Mark 1.00 out (a) They are required to hold a minimum cash reserve of 2,5% of their deposits.
of 1.00
(b) The level of the repo rate influences the interest rate at which the banks provide credit to individuals.
Flag
question (c) The SARB provides cash reserves through accommodation policy to the banks experiencing liquidity shortage.
Select one:
a. (a), (b) and (c)
b. (b)
c. (a) and (b)
d. (a)
e. (c)
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