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Exam (elaborations) ECS1601 Assignment 04 semester 2 2022 ECS 1601 (ECS1601) Economics for South African Students, ISBN: 9780627033421 R55,00
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Exam (elaborations)

Exam (elaborations) ECS1601 Assignment 04 semester 2 2022 ECS 1601 (ECS1601) Economics for South African Students, ISBN: 9780627033421

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ECS1601 Assignment 04 semester 02 2022

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  • September 26, 2022
  • 10
  • 2022/2023
  • Exam (elaborations)
  • Questions & answers

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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




https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=5784967&cmid=213767 1/10

, 9/26/22, 10:02 AM Assessment 4: Attempt review

Question 3
Correct

Mark 1.00 out of 1.00




The question is based on the information provided below:

Government spending = R500
Exports = R300
Autonomous consumption = R200
Autonomous imports = 0
Investment expenditure = R100
Marginal propensity to consume = 0,6
Marginal propensity to import = 0,1
Proportional tax rate = 0,25


What is the equilibrium level of income Y* in the given model?


a. R1 598
b. R1 692
c. R1 757
d. R1 800
e. R2 000



A=C+I+G+X-Z=C ̅+c(i-t)Y+I ̅+G ̅+X ̅-(Z ̅+mY) At equilibrium Y=A Thus Y=C ̅+c(i-t)Y+I ̅+G ̅+X ̅-(Z ̅+mY) Y = R200 + 0,6 (1 - 0,25)Y + R100 +
R500 + R300 – (R0 + 0,1Y) Y = 0,45Y + R1 100 – R0 - 0,1Y Y = R1 100 + 0,45Y – R0,1Y Y = R1 100 + 0,35Y Y–0,35Y = R1 100 0,65Y= R 1 100
Y = R1 100/0,65 = R1 692,31 ≈ R 1692.




https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=5784967&cmid=213767 2/10

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