Exam (elaborations)
ECS1601 Assignment 7 (COMPLETE ANSWERS) 2024 - DUE 29 October 2024
ECS1601 Assignment 7 (COMPLETE ANSWERS) 2024 - DUE 29 October 2024
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,ECS1601 Assignment 7 (COMPLETE ANSWERS)2024 - DUE 29 October 2024; 100% TRUSTED
Complete, trusted solutions and explanations.
Question 1 (5 marks) Maximum word count: 100 words 1.1
Suppose you live in South Africa and have the option to buy
proudly South African products or international brands. With
reference to the circular flow of goods and services and the
circular flow of income and spending between households,
firms, government and the foreign sector, provide an
explanation as to why it is better to purchase the proudly South
African products and also explain the opportunity costs of
buying international items instead of those produced locally. (5
marks)
Purchasing proudly South African products supports the local
economy by boosting domestic firms' revenue, which in turn
leads to increased production and job creation. This enhances
the circular flow of income as households spend on local goods,
firms pay wages, and taxes contribute to government funds for
public services. Choosing international brands means income
flows out of the country, reducing available funds for domestic
economic activities. The opportunity cost of buying foreign
goods is the potential loss of local economic growth,
employment opportunities, and lower government revenue,
which could otherwise benefit from sustained domestic
production and spending.
, Buying Proudly South African products supports the local
circular flow of income, as money spent on domestic goods
remains within South Africa, benefitting households, firms, and
government through increased production, employment, and
tax revenues. This strengthens the economy by fostering
domestic job creation and supporting local businesses. In
contrast, purchasing international brands diverts income to the
foreign sector, reducing domestic economic circulation. The
opportunity cost of choosing international items includes
potential job losses, a weaker currency, and reduced national
economic growth, as local resources are not fully utilized to
meet consumer demands.
Purchasing proudly South African products supports local
businesses, enhancing the circular flow of income within the
economy. When households buy local, money circulates back to
domestic firms, creating jobs and increasing household income,
which in turn boosts government revenue through taxes,
allowing for better public services. Supporting local products
reduces dependency on imports, helping to strengthen the
national economy. Conversely, buying international brands
redirects spending outside the country, reducing income for
South African firms and the local workforce. The opportunity
cost is the economic growth, job creation, and self-sufficiency
that could have been fostered by choosing local products.
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