State Finished
Completed on Thursday, 14
September 2023,
Time taken 37 mins 31 secs
out of 20.00
%)
Question 1
Complete
Mark 1.00 out of 1.00
Which of the following statements is/are
correct about what in uences South
African exports?
a) Changes in exchange rates do have an
in uence on South African exports.
b) Changes in economic conditions in
the rest of the world.
c) Changes in the demand for exports.
e) International competitiveness does not
in uence exports.
a and b
a and c
a, b and e
a, b and c
a, c and e
SA exports are in uenced by economic
conditions in the rest of the world,
international competitiveness, exchange
rates, and the demand for exports does
not depend on the income level in SA;
therefore, export spending is exogenous.
Which of the following is correct
regarding the effect of expansionary
monetary policy in the Keynesian model?
a. The consumption function
swivels downward showing a fall
in aggregate spending and
income.
b. The aggregate spending curve
will shift downward showing a
fall in aggregate spending and
income.
c. Investment spending will
increase, which is shown by an
upward shift of the aggregate
spending curve.
d. Firms will choose to invest less.
An expansionary monetary policy occurs
when the monetary authorities reduce the
repo rate, thereby reducing the interest
rate. As the interest rate (cost of
borrowing) falls, investment spending
increases. The increase in investment
spending will be shown by an upward
shift of the aggregate spending curve.
Firstly, a downward swivel of the
consumption function is caused by an
increase in tax rate and not interest rate,
which then results in a fall in aggregate
spending and income. Secondly, rms will
invest more due to the fall in cost of
borrowing.
Which of the following is correct
regarding the effects of expansionary
scal policy?
a. The size of the multiplier will
increase.
b. Autonomous spending and the
level of income will decrease.
c. The slope of the consumption
function will decrease due to a
rise in the tax rate.
d. There will be a leakage of money
out of the circular ow of
income, spending and
production.
An expansionary scal policy occurs
when government spending is increased
and taxes decreased. Since taxes affect
the slope of the consumption function, a
reduction in taxes increases the slope of
the consumption function, thus causing
the size of the multiplier to increase.
Autonomous spending and equilibrium
income will increase due to the injection
of money in the circular ow of income,
spending, and production.
Assume that the full-employment income
level is higher than the equilibrium
income level. Full employment can be
reached if
a)exports increase.
b)imports decrease.
c)the tax rate decreases.
a. All the statements are correct.
b. a and c
c. a
d. b
e. c
An increase in exports will raise the
equilibrium level closer to the full
employment level. The decrease in
imports will raise the equilibrium level to
a higher income level. A tax rate decrease
will increase the equilibrium level closer
to the full employment levels.
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ExpertAcademy. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R85,00. You're not tied to anything after your purchase.
