THIS DOCUMENT CONTAINS ECS1601 ASSESSMENT 7 ALTERNATIVE OF 2024 EXPECTED QUESTIONS AND ANSWERS. USE IT AS A GUIDE IN CREATING YOUR OWN TO SCORE ABOVE 75%
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The Benefits of Buying Proudly South African
Understanding the circular flow of goods and services, and the circular flow of income and
spending, helps us appreciate the advantages of choosing local products.
Circular Flow and Local Purchases
Stimulating the Local Economy: When we buy South African products, we're directly
contributing to the circular flow of income within our economy. Our money stays within
the country, boosting local businesses, creating jobs, and generating tax revenue. This, in
turn, leads to increased economic growth and development.
Supporting Local Communities: By supporting local businesses, we help sustain local
communities. This can lead to improved infrastructure, better education, and a higher
standard of living for everyone.
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Reducing Carbon Footprint: Buying local products often means shorter transportation
distances, which reduces greenhouse gas emissions and helps protect the environment.
Opportunity Costs of Buying International Products
When we choose international products over local ones, we incur opportunity costs:
Loss of Local Jobs: Importing goods can lead to job losses in local industries as consumers opt for
foreign alternatives.
Reduced Economic Growth: Less money circulating within the domestic economy can slow down
economic growth and development.
Increased Dependence on Foreign Economies: Relying heavily on imports can make our economy
vulnerable to external shocks, such as global economic downturns or trade disputes.
, 2.1
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i0
E1
i1
Mdo
Md1
, As economic growth moderates, there is likely to be a reduction in the demand
for money. This is because lower growth often means fewer transactions in the
economy, as businesses and individuals may spend and invest less than during
periods of higher growth. This decreased activity leads to a leftward shift in the
money demand curvem from (Md0 to Md1. The equlibrium in the money
market will move from E0 to E1
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