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Ecs1601 Assignment 4 Semester 2 2023
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- Ecs1601 Assignment 4 Semester 2 2023
Ecs1601 Assignment 4 Semester 2 2023
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Ecs1601 Assignment 4 Semester 2 2023__________ is not a primary cause of government failure. - ans2) The inefficient behaviour of the market
(correct)
____________ is NOT likely to cause a problem in the measurement of GDP.
[1] Pollution
[2] Smuggling
[3] Commercial farming
[4] Adjustment of original data - ans[3] Commercial farming
_______________ would result due to the closure of the gold mines in South Africa.
[1] Seasonal unemployment.
[2] Structural unemployment.
[3] Cyclical unemployment.
[4] Frictional unemployment. - ans[2] Structural unemployment.
1.7. Use the following two statements to answer the question:
a. The primary function of government is to establish the framework within which the economy operates.
b. A member of the government cannot be a member of a household.
[1] only a is correct.
[2] a is incorrect and b is correct.
[3] both a and b are correct.
[4] both a and b are incorrect. - ans[1] only a is correct.
A complete business cycle is represented by movement from
1) A to B.
2) B to C.
3) A to C. (correct) - ans3) A to C. (correct)
A country's balance of payments ...
[1] records all the economic activities which take place within the boundaries of the
country.
[2] will show a deficit on the current account if the value of exports exceeds the value of
imports.
[3] keep records of all transactions that its households, firms, and government complete with households,
firms, and government outside the country.
[4] records all the transactions in the rest of world. - ans[3] keep records of all transactions that its
households, firms, and government complete with households, firms, and government outside the
country.
A decrease in leakages from the circular flow of income and spending leads to _________ in the
multiplier. - ans3) an increase (correct)
A decrease in the marginal propensity to consume - ans4) lowers the value of the multiplier. (correct)
A decrease in the tax rate in the Keynesian model will ...
[1] shift the aggregate spending curve downwards.
[2] shift the consumption curve upwards.
[3] swivel the consumption curve downwards
[4] swivel the aggregate spending curve upwards - ans[4] swivel the aggregate spending curve upwards
,Ecs1601 Assignment 4 Semester 2 2023
A depreciation in the value of the rand on the foreign exchange market is most likely to lead to____ - ansa
higher demand for South African exports
A depreciation of the rand against the dollar will lead to a decrease in ...
[1] the price of imported goods in South Africa.
[2] the price of South African products sold in the US.
[3] the price of petrol in South Africa.
[4] the number of tourists from the US visiting South Africa. - ans[2] the price of South African products
sold in the US.
A depreciation of the rand may have inflationary consequences in South Africa because it______. -
ansincreases the costs of exports
A depreciation of the rand may have inflationary consequences in South Africa because it______. -
ansincreases the costs of imported goods.
A flow variable is defined as a variable that is measured over a period. Which one of the following
variables is not an example of a flow variable?
[1] National income
[2] The balance on Sibahle's savings account
[3] Budget deficit
[4] Total production - ans[2] The balance on Sibahle's savings account
A form of expenditure that does NOT depend on real GDP or income is called - ans3) autonomous
expenditure. (correct)
A neutral tax ...
[1] distort the allocation of resources.
[2] lower the welfare of society.
[3] has a low effect on relative prices.
[4] act as a disincentive to the owners of factors of production. - ans[3] has a low effect on relative prices.
A News Website headline reads: "SARB Reduces Repo Rate for Third Time This Year."
This headline indicates that the SARB is most likely trying to...
[1] decrease the cost of credit.
[2] increase the liquidity deficit of the private banks.
[3] increase the SARB current market rates.
[4] decrease inflationary pressures in the economy. - ans[1] decrease the cost of credit.
A person is considered unemployed, when he/she is ...
[1] a fulltime student.
[2] not looking for a job because there are no jobs available where he/she stays.
[3] a fulltime stay home dad or mom who looks after the family.
[4] temporarily laid off. - ans[4] temporarily laid off.
A person should specialise in the activity ...
[1] with the lowest cost.
[2] which he likes the most.
[3] with the lowest opportunity cost.
[4] closest to home. - ans[3] with the lowest opportunity cost.
,Ecs1601 Assignment 4 Semester 2 2023
A simultaneous decrease in aggregate supply and an increase in aggregate demand will always - ans3)
increase the price level. (correct)
A specific tariff imposed on the imports of motor vehicles will - ans2) increase the level of domestic
production of motor vehicles. (correct)
A surplus on the current account implies ...
[1] the value exports are more than the value of imports.
[2] the value exports are less than the value of imports.
[3] a net inflow of foreign capital.
[4] a net outflow of foreign capital. - ans[1] the value exports are more than the value of imports.
A tax is progressive if - ans3) the marginal tax rate increases as income increases. (correct)
Accommodation policy by the South African Reserve Bank may involve ...
(a) supplying funding for low-cost housing.
(b) providing liquidity to the banks by means of repurchase agreements.
(c) selling of government stock to contribute to lower interest rates.
(d) quantitative easing.
[1] only (a) and (c) are correct.
[2] only (a) and (d) are correct.
[3] only (b) and (c) are correct.
[4] only (b) is correct. - ans[4] only (b) is correct.
According to Keynes, the level of employment in the economy is determined by - ans1) the level of
aggregate demand for goods and services. (correct)
According to Say's law - ansb) all leakages automatically find their way back into the circular flow of
income and spending. (correct)
c) total spending will always be equal to total income. (correct)
According to the assumptions of the simple Keynesian model, the economy only consists of the two
sectors; households and firms.
There is ______________ relationship between government spending and total income. - ans2) no
systematic (correct)
An appropriate government intervention in the economy ...
[1] is to encourage a monopolistic market that satisfies the aggregate demand for goods
and services by the public.
[2] is to get involved in the economic sectors where the private sector is producing
goods and services more efficiently.
[3] involves measures to correct market failure and provision of public goods and services.
[4] has to do with taking income from those with low incomes and providing income to
those with higher incomes. - ans[3] involves measures to correct market failure and provision of public
goods and services.
An appropriate policy to solve the inflation problem arising from the above diagram would be to...
[1] increase the tax rate
[2] reduce the import tariffs.
, Ecs1601 Assignment 4 Semester 2 2023
[3] reduce government spending.
[4] apply the incomes policy. - ans[4] apply the incomes policy.
An expansionary monetary policy is less effective if - ans3) the interest elasticity of investment demand is
smaller and the AS curve is steeper. (correct)
An expansionary monetary policy will be less effective if...
[1] the aggregate supply curve is very steep.
[2] the multiplier is very large.
[3] the investment demand is responsive to the interest rate.
[4] the aggregate demand curve is very steep. - ans[1] the aggregate supply curve is very steep.
An increase in income will...
[1] shift LL to the right.
[2] not affect LL.
[3] change the slope of the LL curve.
[4] result in a downward movement along the LL curve. - ans[1] shift LL to the right.
An increase in the marginal propensity to consume ...
[1] decreases the value of the multiplier
[2] does not affect the multiplier.
[3] increases the value of the multiplier.
[4] will not occur because the marginal propensity to consume is set by government. - ans[3] increases
the value of the multiplier.
As disposable income increases, consumption expenditure - ans2) increases by a smaller amount.
(correct)
As income rises following an increase in autonomous net exports, induced imports will _____.
[1] decrease
[2] remain unchanged
[3] increase
[4] increase by the same value as increase in income - ans[3] increase
As interest rates decrease, ...
[1] bond prices decrease.
[2] bond prices increase.
[3] the face value of bonds increase.
[4] the face value of bonds decrease. - ans[2] bond prices increase.
As the monetary authority______ the repo rate, the interest rate will______ as well. The opportunity cost
of holding money______ and individuals will choose to hold_____ money.
[1] increases; increase; increase; more
[2] decreases; increase; decrease; less
[3] increases; decrease; increase; more
[4] increases; increase; increase; less - ans[4] increases; increase; increase; less
As the monetary authority______ the repo rate, the interest rate will______ as well. The opportunity cost
of holding money______ and individuals will choose to hold_____ money. - ansincreases; increase;
increase; less
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