Tutorial Letter 001/3/2021 Macroeconomics (ECS2602) Semester 1 and 2 Department of Economics

ASSESSMENT CHANGES for 2021 ACADEMIC YEAR Due to the ministerial request to extend the 2021 registration dates, Unisa had to amend both the semester dates and the assessment arrangements for the 2021 academic year. During 2021 we will have only one semester and only one tuition and assessment period. This assignment contributes 20% towards your semester mark. Please ensure that this assignment reaches the university before the due date. 1. The main focus of this macroeconomics module is the study of …. 1. the determinants of the short, medium and long-term growth potential of the economy. 2. only the interaction between the goods market and the financial market. 3. different theories on the determination of output in a closed economy in the short term only. 4. only the determination of the level of output and income and fiscal and monetary policy impact on the financial, labour and foreign exchange markets. 5. the determination of output and the impact of fiscal and monetary policy on the level of output. 2. Which of the following would be included in calculating the gross domestic product (GDP) of South Africa? a. A citizen from Zimbabwe (foreign country) earns a wage at a gold mine in South Africa. b. A farmer from Gauteng (South Africa) buys his neighbour's tractor. c. Ford Motor Company of America builds an assembly plant in the Eastern Cape (South Africa). d. Exports of agricultural products to Britain. e. Imports of motorcars from Japan to South Africa. 1. a, b, c, d and e 2. Only a, c and d 3. Only b, c and e 4. Only a and c 5. Only b and e 6 3. Which of the following are endogenous variables in the goods market model? 1. The level of output and income and investment spending. 2. Marginal propensity to consume and the level of output and income. 3. The level of output and income. 4. Investment spending. 4. The difference between expenditure on the gross domestic product (GDP) and gross domestic expenditure (GDE) is that … 1. expenditure on the GDP includes both imports and exports, while GDE includes exports and excludes imports. 2. expenditure on the GDP includes exports and excludes imports, while GDE includes both imports and exports. 3. expenditure on the GDP includes exports and excludes imports, while GDE includes imports and excludes exports. 4. expenditure on the GDP includes imports and excludes exports, while GDE includes exports and excludes imports. 5. Which of the following are correct in terms of the goods market model? a. G↑ → Z↑ → Y↑ → YD↑ → C↑ b. I↑ → Z↑ → Y↑ → YD↑ → C↑ c. T↓ → Z↑ → Y↑ → YD↑ → C↑ d. c0↑ → Z↑ → Y↑ → YD↑ → C↑ 1. Only a, b and c 2. Only a, b and d 3. Only b, c and d 4. Only a, c and d 5. a, b, c and d Question 6 is based on the following diagram: ECS2602/001/3/2021 7 6. Which of the following statements are correct? a. At an income level of 200, induced consumption is equal to 100. b. At an income level of 200, autonomous consumption is equal to 100. c. The marginal propensity to consume is equal to 0.15. It means that if the income of households increases by 100, the first round increase in consumer spending will be 15. d. An increase in autonomous consumption will influence the slope of the consumption curve. e. If the marginal propensity to save by households increases, the marginal propensity to consume will be lower. In other words, the slope of the C curve will be flatter. 1. a, c and d 2. b, c, d and e 3. Only b, c and e 4. Only b and e 5. Only a and e Question 7 is based on the following diagram. 7. Which of the following statements are correct? a. Induced consumption is equal to R100 if income is R400. b. The multiplier is equal to 4. c. If government spending increases with R50, the equilibrium output and income level will increase by 50 times the multiplier. d. If there is a change in the marginal propensity to consume, the Z curve will shift upwards, and the equilibrium level of output and income will increase. e. Any change in consumer confidence will not affect the above goods market model. 1. a, b and c 2. b, c and d 3. a, c and e 4. b, d and e 5. Only b and c