THIS DOCUMENT CONTAINS EXPECTED QUESTIONS AND ANSWERS FOR ECS1601 ASSIGNMENT 4. THE DOCUMENT SHOULD BE USED FOR STUDY AND RESEARCH PURPOSES AS YOU PREPARE TO TAKE YOUR ASSIGNMENT. MOST QUESTIONS WILL BE THE SAME OR SIMILAR TO YOURS THEREFORE CORRECT USE SHOULD ENSURE YOU SCORE ABOVE 75%.
Started on Friday, 6 October 2023, 1:53 PM
State Finished
Completed on Friday, 6 October 2023, 2:25 PM
Time taken 31 mins 53 secs
Marks 18.00/20.00
Grade 90.00 out of 100.00
Question 1
Correct
M ark 1.00 out of 1.00
Which of the following can cause demand-pull inflation?
[1] A decrease in interest rates which leads to an increase in consumption and investment spending.
[2] An increase in government spending on social wealth and education.
[3] A rise in the cost of import intermediate goods due to a depreciation of the domestic currency.
a. [2]
b. [1], [2] and [3]
c. [3]
d. [1]
e. [1] and [2]
Refer to section 10.4 of the prescribed textbook.
Question 2
Correct
M ark 1.00 out of 1.00
Cost-push inflation can be caused by …
a. an increase in investment spending and government spending.
b. a decrease in wages and salaries.
c. an increase in profit margins, a decrease in productivity and the impact of natural disasters.
d. a decrease in the cost of imported capital and intermediate goods.
Refer to section 10.4 of the prescribed textbook.
,Question 3
Correct
M ark 1.00 out of 1.00
Suppose there is a reduction in interest rates in the economy. This may cause …inflation and may result in … in production, income and
employment.
a. cost-push; increases
b. cost push; decreases
c. demand-pull; decreases
d. demand-pull; increases
Refer to section 10.4 of the prescribed textbook.
Question 4
Incorrect
M ark 0.00 out of 1.00
In the AD-AS model, an expansionary fiscal policy may lead to a…
a. leftward shift of aggregate demand and demand-pull inflation.
b. rightward shift of aggregate demand and demand-pull inflation.
c. rightward shift of aggregate supply and cost-push inflation.
d. leftward shift of aggregate supply and cost-push inflation.
Refer to section 10.4 of the prescribed textbook.
, Question 5
Correct
M ark 1.00 out of 1.00
Paul lends R10 000 to his friend Steven for one year. They agree that Steven would pay the R10 000 back with 5% interest at the end of
the year. If the inflation rate is 6%, which of the following would be true for the real value of the amount that Steven pays back at the end
of the year?
a. It would be more than R10 500.
b. It would be more than R10 000 but less than R10 500
c. It would be less than R10 000.
d. It would be exactly R10 500.
Refer to section 10.3 of the prescribed textbook.
Question 6
Correct
M ark 1.00 out of 1.00
The distribution effects of inflation are best described by …
a. the elderly benefiting at the expense of the young.
b. the poor benefiting at the expense of the rich.
c. borrowers benefiting at the expense of lenders.
d. creditors benefiting at the expense of debtors.
Refer to section 10.3 of the prescribed textbook.
Question 7
Correct
M ark 1.00 out of 1.00
Suppose 25 000 000 people are in the labour force, 8 000 000 people are employed in the public sector and 5 000 000 people are employed
in the private sector. What is the unemployment rate?
Answer: 48%
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