Varsity College macro economics notes/summary. PMAC 6112 notes.
I made and used these notes for second semester exam for macro economics. PMAC6112, i finished with a very decent mark... these notes are great and will help for your last minute studying.
1. Absolute advantage: 1 country has ability to produce a good using fewer resources then
another would.
2. Comparative advantage (relative): when 1 country can produce a good at a lower
opportunity cost then another country.
3. Equal Advantage: both countries have the same opportunity cost ratio in production of
goods- no basis for trade.
Control level of imports:
Import tariffs: duties or taxes on value of imported goods. (protects domestic firms)
Import quotas: limits quantity of imported goods.
Subsidies: granted to domestic producers, same impact taxes have on imported goods.
Non-tariff barriers: (unnecessarily red tape) minimum requirement of for technical
standards or specs for foreigners. - harder for firms to export to south Africa.
Exchange controls: restrict imports by limiting quantity of of foreign currency available
for their purchase.
Supply of dollars:
South African exporters receive dollars then exchange it for RAND.
FOREIGNERS buying shares on the JSE/government stock or assets.
South Africans selling foreign shares.
Speculator of the rand appreciating
Demand of dollars:
South African importers- pay in dollars.
South Africans buying shares in America
American investors in SA sell their shares/assets - then convert to dollars.
South African tourists buying dollars.
Speculators who anticipate decline in value of rand relative to dollar.
, Chapter 13 LU 5
1. GDP: total value of all (final) goods and services produced within south africa
during a year.
Macroeconomic objectives:
Economic growth: increase in total production of goods and services - measures
GDP.
Full employment: all country s resources are fully utilized.
Price stability: aimed at keeping inflation under control (low as possible).
Balance of payments: ensuring that the BOP doesn't run a prolonged deficit or
surplus.
Equitable distribution of income: socially accepting the distribution of income.
2. The national income accounts: show level and composition of economic activity
during a particular period.
GDP: market value of final goods and services produced within south Africa in a
specified time period.
3 methods to calculate GDP
Production method (value added)
Expenditure method (final goods & services).
Income method (incomes of the factors of production)
Market price- used when calculating GDP on the expenditure method. -
VAT+subsidies= basic price
Basic prices- used when calculating GDP on the production method. - taxes +
subsidies = GDP@ factor cost.
Factor income- used when calculating GDP on the income method.
GNI= GDP+ primary income receipts - primary income payments.
Balance of payments account: current account and financial account.
Current account: records all exports and imports of goods and services.
Surplus= X>Z
Deficit= X<Z
Financial account: records all financial flows in and out of the country.
Income receipts: income earned by South Africans in the rest of the world.
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