Monday, January 11, 2016

111. Assignment Economics 1B Mancosa 2016

I will be placing some guidelines here regarding the completion of the Economics 1B Assignment.

Keep your eyes peeled! We will discuss the following topics in class to help you answer the multiple choice questions: ASSIGNMENT 8: ECONOMICS 1B

QUESTION 1

(20)

In each of the following cases only one answer is correct. Write down numbers 1.1 to 1.10 in your answer book and next to each number write the letter that represents the correct answer. E.g. 1.11 a

1.1 Which one of the following is NOT an objective of macroeconomic policy?

a) Price instability.

b) Full employment.

c) Economic growth.

d) Equitable income distribution.

e) None of the above.

page 7 of the Mancosa study guide is clear about what constitutes Macroeconomic Policy.

Full employment; Price stability; Economic Growth; External Stability (Balance of Payments); Equity or Income redistribution; (the last one being a contentious issue)

1.2 Which of the following is defined as a leakage from the circular flow of income and spending?

a) Investment.

b) Consumption.

c) Imports.

d) Exports.

e) Subsidies.

Slide 51 from the first lecture will give you enough information - make sure that you understand the slide and draw it for your general understanding and obvoiusly for exam purposes.Have a look at the slide showing the 5-sector circular flow used in the first lesson. it clearly shows the leakages and injections.

1.3 Which of the following statements about the measurement of GDP is/are INCORRECT?

1. Expenditure on GDP = C + I + G + Z- X

2. Gross Domestic Expenditure = C + I + G

3. GDP measured at factor cost = GDP at market prices – Indirect Taxes + Subsidies

a) Statement 1 only.

b) Statement 2 only.

c) Statements 1 and 3 only.

d) Statements 2 and 3 only.

e) Statement 1 and 2 only.

1.4 GDP at ________ prices will usually be greater than GDP at ________ prices because of ________. a) constant; current; inflation b) current; constant; inflation

c) constant; current; depreciation

d) current; constant; depreciation

e) current; constant; deflation

1.5 In the Keynesian model, government expenditure:

a) is undertaken solely to regulate the level of spending.

b) increases with investment because investment increases the size of the tax base.

c) is taken to be autonomous because it is subject to government policy.

d) can be ignored because investment is taken to be the key determinant of income.

e) is determined by the level of tax revenue.

1.6 In a barter economy, exchange between Candase and Aliya will only occur when;

a) Candase wants the product that Aliya has.

b) Aliya has a good to exchange with Candase.

c) Candase is satisfied with the product that Aliya has to offer.

d) Candase and Aliya each have a product that the other person wants.

e) Aliya has the product that Candase wants.

The phrase double coincidence of wants was used in Jevons (1893). "The first difficulty in barter is to find two persons whose disposable possessions mutually suit each other's wants. There may be many people wanting, and many possessing those things wanted; but to allow of an act of barter there must be a double coincidence, which will rarely happen."

1.7 Zimbabwe has an absolute advantage over South Africa in cotton production if, during a year, Zimbabwe:

a) can produce more cotton than South Africa.

b) specialises in cotton production.

c) can produce less cotton than South Africa

d) consumes more cotton than South Africa on average.

e) can produce more cotton than South Africa with a given amount of resources.

1.8 Which one of the following is a possible cause of cost-push inflation?

a) An increase in government spending.

b) An increase in the oil price.

c) An increase in consumption spending.

d) An increase in investment spending.

e) An increase in export earnings.

1.9 As a result of more Zambians visiting South Africa, we can expect, ceteris paribus:

a) an appreciation of the rand relative to the kwacha.

b) a depreciation of the rand relative to the kwacha.

c) an appreciation of the kwacha relative to the rand.

d) that it will cost South Africans more to visit the Zambia.

e) an appreciation of the kwacha relative to all major currencies.

1.10 During an economic downturn, sales fall and some workers lose their jobs. This unemployment is referred to as:

a) seasonal unemployment.

b) frictional unemployment.

c) structural unemployment.

d) technological unemployment.

e) cyclical unemployment.

I would strongly advise that you read the sections in the textbook relating to the various types of unemployment.

Also have a look at some of the subcategories under structural employment - In South Africa regulations is a huge stumbling block in attaining full employment. One of the causes here is the fact that the unions have a huge influence on economic policy in SA because of historical reasons - they played a large political role in the fall of Apartheid and have maintained that role to the detriment of the economic welfare of the population as a whole

Question 2 (20)

2.1 Describe THREE (3) functions of money. (6)

2.2 Identify and explain ANY FOUR (4) functions of the South African Reserve Bank. (8)

2.3 Differentiate between the open market policy (OMO) and the accommodation policy as instruments of monetary policy. (6)

QUESTION 3 (30)

3.1 Distinguish between Nominal GDP and Real GDP. (6)

3.2 List and explain the THREE (3) methods of measuring South Africa’s Gross Domestic Product (GDP). (6)

3.3 Explain ANY FOUR (4) shortcomings of GDP as a measure of economic performance. (8)

3.4 Discuss the argument for and against economic growth. (10)

QUESTION 4 (30)

4.1 Define the concept “terms of trade” and explain its significance . (4)

4.2 Using examples, distinguish between the following terms 4.2.1 Absolute advantage and comparative advantage. (4)

4.2.2 Floating exchange rate and a fixed exchange rate. (4)

4.2.3 Currency appreciation and currency depreciation. (4)

4.2.4 Import tariff and import quota. (4)

Africa’s Gross Domestic Product (GDP). (6)

3.3 Explain ANY FOUR (4) shortcomings of GDP as a measure of economic performance. (8)

3.4 Discuss the argument for and against economic growth. (10)

QUESTION 4 (30)

4.1 Define the concept “terms of trade” and explain its significance . (4)

4.2 Using examples, distinguish between the following terms 4.2.1 Absolute advantage and comparative advantage. (4)

4.2.2 Floating exchange rate and a fixed exchange rate. (4)

4.2.3 Currency appreciation and currency depreciation. (4)

4.2.4 Import tariff and import quota. (4)

4.3 Discuss the arguments for and against the use of trade barriers in your country. (10)

2 comments:

  1. Here is a video on terms of trade: https://www.youtube.com/watch?v=wmqnCjjidEM

    ReplyDelete
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    ReplyDelete