ECS1601
Assignment 7 (COMPLETE
Wel ANSWERS) 2024 - DUE 29
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for a
October 2024
, ECS1601 Assignment 7 (COMPLETE ANSWERS) 2024 - DUE 29 October 2024
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) Question 2 (10 marks) Maximum word count: 150 words 2.1 The
following question is based on the passage below: NEWS Extract 2A After 2.0% economic growth for
2022 as a whole, South Africa's economy is now 0.3% bigger than it was in 2019 before the COVID-19
pandemic, Stats SA said, adding that the expansion was smaller than a 3.5% rise in the country's
population over the same period. Gross domestic product grew 0.9% year on year in the fourth quarter,
worse than forecasts for a 2.2% expansion. Source: Reuters (2023) < With the aid of a diagram, explain
how the money market in South Africa will be affected by the abovementioned changes in economic
activity. The direction of any changes should be clearly indicated by using arrows. (4 marks) Page 4 of 7
ECS1601 | Assessment 07 | Year 2024 2.2 • What effect will a change in economic growth prospects of
China, as described in Extract 2B, have on the foreign exchange market of developing countries like
South Africa where China is a significant trading partner? Include a diagram in your answer. (6 marks)
Question 3 (10 marks) Maximum word count: 200 words 3.1 Read the following news clip and answer
the question. News extract 3A Ghana inflation edges up to 42.5% in annual terms in June Ghana’s 328,86
328,58 2022 331,38 336,72 344,29 355,52 359,16 358,60 363,37 366,46 372,35 381,89 390,59 398,73 •
QUESTION 1
Q 1.1.
By purchasing local production it dramatically increases the circular flow of income and
expenditure within the economy. If consumers buy things that are produced in their own country,
the income stays and flows within the local market sexological research Sebokeng exploit. It
benefits South Africa households and businesses. As such transactions expand, the demand for
local products grow, which in turn increases the level of production and provides more
employment opportunities to locals while they continue to make a living wage. In addition to
this, local businesses can pay tax which will create government income, along with providing
