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)
Explanation of Purchasing Proudly South African Products
The circular flow of goods and services illustrates the
interaction between households, firms, government, and the
foreign sector. When consumers purchase proudly South
African products, they support local firms, which in turn
stimulates domestic production and employment. This creates a
positive feedback loop where increased income leads to higher
spending within the local economy.
Conversely, buying international brands results in money
flowing out of the local economy to foreign producers.
The opportunity cost of purchasing these international items
includes not only the loss of potential local jobs but also
, diminished investment in domestic industries. Thus, supporting
local products fosters economic growth and sustainability.
Top 3 Authoritative Sources Used in Answering this Question
1. South African Reserve Bank (SARB)
This source provides comprehensive insights into the economic
dynamics within South Africa, including the impact of consumer
spending on local versus international markets.
2. National Treasury of South Africa
The National Treasury offers detailed reports on fiscal policies
and their implications for economic growth, emphasizing the
importance of supporting local industries.
3. World Bank - South Africa Overview
The World Bank provides data and analysis on South Africa’s
economy, highlighting the benefits of local production and its
effects on employment and income distribution.
Buying proudly South African products supports local
businesses, keeps money within the economy, and strengthens
the circular flow of income, as households' spending goes to
local firms, which in turn pay wages and taxes to the
government. This creates a positive cycle benefiting
households, firms, and the government. Choosing international
brands, however, means income flows out of South Africa,
reducing domestic economic growth. The opportunity cost of
buying international items is the potential economic boost and
job creation that could have resulted from purchasing local
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