ECS3701
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,UNIVERSITY EXAMINATIONS
May/June 2023
ECS3701
Monetary Economics
100 Marks
Duration: 2 Hours
First Examiner: Prof TLA Leshoro
Second Examiner: Ms TS Moletsane
External Examiner: Ms PA Mathebula
This paper consists of 11 pages.
CONFIDENTIAL
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(2) Start with a cover page stating the module code (ECS3701) and your student number.
(3) This should be followed by your answers to the questions.
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STUDENT NUMBER
, Page 2 of 11 ECS3701
CONFIDENTIAL 05/06 2023
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, Page 3 of 11 ECS3701
CONFIDENTIAL 05/06 2023
ANSWER ALL FIVE QUESTIONS.
Question 1 [20 marks]
Read the excerpt below, taken from the MoneyWeb, and answer the questions that follow:
Ahead of the December festive season spending spree, to rein in spiking inflation, the South African
Reserve Bank (Sarb) ratcheted the repo rate by 75 basis points on Thursday to 7%, as widely expected.
This is the third consecutive hike by such a margin and the seventh hike in a row, as part of hawkish
moves by the bank’s Monetary Policy Committee (MPC) to bring spiking inflation under control.
Source: Sarb ratchets repo rate by another 75bps - Moneyweb
1.1 Which of the transmission mechanism did the reserve bank use in this case? [2]
1.2 Illustrate the effects of this action on the real variables (Hint: illustrate all the way to the price level).
[6]
