UNISA Exam Memo May/June 2014 ECS1601 SECTION A (50 MARKS) Question 1 (2 marks)
Taxes and Savings
Question 2 (2 marks)
Accommodation Policy and Open Market Policy
Question 3 (2 marks)
Neutrality Equity Administrative Simplicity
Neutrality-Taxes should have the minimum impact on incentive to work and efficient allocation of resources. Question 4 (1 mark) Comparative Question 5 (2 marks) Decision Lag Implementation Lag Question 6 (2 marks) CPI: is an index of a representative “basket” of consumer goods and services or the cost of living. The CPI thus represents the cost of the “shopping basket” of goods and services of a typical or average South African household.
PPI: measures prices at the level of the first significant commercial transaction e.g. prices of imported goods are measured at the point where they enter the country and not where they are sold to consumers
Question 7 (2 marks) (
1
)
Question 8 8.1 and 8.2 (3 +1 marks)
8.3 (1 mark) South African Reserve Bank (SARB) Question 9 9.1 9.2 marks)
( )
(
)
(
)
( )
(
(
9.3 (2 marks)
2
(2 marks)
)
)
(3
Question 10 (5 marks)
A
A=Y
A2=C+I+G E2
A=C+I A3
E3 E1
0
Y
Question 11 11.1
(
)
(1 mark)
11.2 (2 marks)
(
)
Question 12 3
12.1 (2 marks)
Product Quantity Hotdogs 150 Pizzas 100 Hamburgers 250 TOTAL GDP
2007 Price Total R 10 R 1 500 R 25 R 2 500 R 15 R 3 750 R 7 750
2012 Product Quantity Price Total Hotdogs 170 R 17 R 2 890 Pizzas 95 R 30 R 2 850 Hamburgers 260 R 22 R 5 720 R 11 460
12.2 (2 marks)
Product Quantity Hotdogs 150 Pizzas 100 Hamburgers 250 TOTAL GDP
2007 Price Total R5 R 750 R 15 R 1 500 R 10 R 2 500 R 4 750
2012 Product Quantity Price Total Hotdogs 170 R5 R 850 Pizzas 95 R 15 R 1 425 Hamburgers 260 R 10 R 2 600 R 4 875
12.3 No because year 2000 is a base year (2 marks) Question 13 13.1 Expansionary fiscal policy: (3 marks)
Government expenditure increase Taxation decreases Budget deficit increases AD-curve shifts to the right Budget surplus decreases
13.2 Expansionary monetary policy: (3 marks)
Expansionary monetary policy involves reducing the interest rate and increasing money supply. a decrease in the repo rate will increase aggregate demand and cause a rightward shift in the AD curve.
4
13.3 (3 marks)
P
AS
P2
P1
AD2
AD1
Y 0
Y1
5
Y2
SECTION B (50 MARKS) 1. 2 2. 1 3. 1 4. 1 5. 4 6. 4 7. 1 8. 1 9. 3 10. 5 11. 3 12. 1 13. 4 14. 3 15. 4 16. 4 17. 1 18. 5 19. 2 20. 4
21.2 22.5 23.2 24.4 25.3 26.1 27.2 28.1 29.2 30.2 31.5 32.5 33.3 34.3 35.4 36.1 37.4 38.2 39.5 40.5
6
