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ECS1601 ASSIGNMNENT 5 SEM 2 OF 2023 EXPECTED QUESTIONS AND ANSWERS R100,00   Add to cart

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ECS1601 ASSIGNMNENT 5 SEM 2 OF 2023 EXPECTED QUESTIONS AND ANSWERS

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THIS DOCUMENT CONTAINS ECS1601 ASSIGNMNENT 5 SEM 2 OF 2023 EXPECTED QUESTIONS AND ANSWERS. USING IT CORRECTLY AS A GUIDE WILL HELP YOU SCORE ABOVE 75%

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  • May 10, 2023
  • October 31, 2023
  • 54
  • 2022/2023
  • Exam (elaborations)
  • Questions & answers
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2.1




The MPC's decision to lower the repurchase rate by 25 basis points to 8.80% per year will have the
following effects on the money market in South Africa:



Increased demand for money: When interest rates are lowered, the opportunity cost of holding cash
decreases, which makes people more likely to hold money. This is because they can earn a higher return
by holding cash than by inves ng in other assets, such as bonds or stocks.

Increased supply of money: Commercial banks are also more likely to lend money when interest rates
are lowered, as they can earn a higher profit margin on loans. This increases the supply of money in the
economy.

Lower interest rates: When the supply of money increases and the demand for money increases, the
price of money, which is the interest rate, decreases.

, 2.2

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