ECS3702 EXAM PACK 2021

Paper November 2021 Question 1 An appreciation of the rand against the US dollar, will result in increased South African imports from the US, this is because fewer Rands can now purchase more US dollars, implying that South Africans now find it cheaper to buy US goods. Question 2 One of the possible effects of a recession in South Africa, on its trade with SADC member states is, widening of South Africa’s trade deficit, which implies that South Africa is exporting less and thus less employment opportunities, and dampened aggregate demand. Question 3 You are told that in 2016, South Africa’s exports to the rest of the world totaled 300 billion dollars, while its exports in the same year amounted to 650 dollars. From this statement, you deduce that, South Africa experienced a current account deficit in 2016. Question 4 Differences between countries in terms of opportunity costs results in countries acquiring, comparative advantage. A country with less opportunity cost does have a comparative advantage in the particular product over the other country. Question 5 The reason why relative costs differ between countries is because, countries have different relative factor endowments. Question 6 Should South Africa impose a tariff on imports from Japan, this will cause domestic production to rise, domestic consumption to rise and imports fall. The answers I guess they are wrong. Question 7 Which of the following statements is correct regarding the effect of imposition of an import tariff and a quota on domestic price and domestic production, an import tariff raises the domestic price of the good and the domestic production levels, and a quota raises the domestic price and domestic production. 2 | P a g e Prepared by Theron Group of Tutors Contact UK @ / for your revision class Question 8 The amount that consumers actually pay for 200 units of goods T is R1 200. Question 9 The total consumer surplus, in the absence of an import tariff and at Pt = R6, ½* base*height,1/2*200*4 = 400. Question 10 South Africa has emerged as a source of outward foreign direct investment on the Africa continent. One of the benefits to recipient African countries, of South Africa investment is increased employment in the African countries. Question 1 (b) 1.1 the European union is an example of a customs union, TRUEA customs union allows no tariffs or other barriers on trade among members (as in a free trade area), and in addition it harmonizes trade policies (such as the setting of common tariff rates) toward the rest of the world. The most famous example is the European Union (EU), or European Common Market, formed in 1957 by West Germany, France, Italy, B