ECS1601
Assignment 7 2024
Unique Number:
Due Date: 29 October 2024
QUESTION 1
1.1.
Choosing to buy proudly South African products positively impacts the circular flow of
income and spending within South Africa's economy. When consumers purchase locally
produced goods, income circulates within the domestic market, benefiting South African
households and firms. These transactions generate higher demand for local goods, leading
to increased production, more employment opportunities, and higher incomes. Local firms
may also contribute to the government’s revenue through taxes, which, in turn, funds public
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QUESTION 1
1.1.
Choosing to buy proudly South African products positively impacts the circular flow
of income and spending within South Africa's economy. When consumers purchase
locally produced goods, income circulates within the domestic market, benefiting
South African households and firms. These transactions generate higher demand for
local goods, leading to increased production, more employment opportunities, and
higher incomes. Local firms may also contribute to the government’s revenue
through taxes, which, in turn, funds public services and infrastructure, further
stimulating economic growth.
In contrast, buying international brands redirects spending outside the country,
reducing the income circulating within South Africa and weakening local businesses.
The opportunity cost of choosing imported goods is the potential loss of domestic job
creation, tax revenue, and investment in local industries. By purchasing locally,
consumers strengthen the economy, supporting sustainable growth and reducing
dependency on foreign markets.
QUESTION 2
2.1.
The slower economic growth in South Africa, as indicated by the lower-than-
expected GDP growth of 0.9% year-on-year in the fourth quarter of 2022, will impact
the money market by reducing the demand for funds. A lower growth rate suggests
that businesses and households may be less inclined to borrow for investments or
consumption, reducing the demand for money in the economy.
