ECS2602
Assignment 1 Semester 1 2025
Unique #:
Due Date: March 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, LEARNING UNIT 1
QUESTION 1
Fiscal policy involves the use of government spending and taxation (0:34 in the
video) to influence the economy.
Explanation
Key Components of Fiscal Policy:
1. Government Spending (G)
o Includes spending on infrastructure, education, healthcare, and
public services.
o Increased government spending stimulates economic growth by
increasing demand.
2. Taxation (T)
o Includes income tax, corporate tax, VAT, and other taxes.
o Higher taxes reduce disposable income and slow economic growth,
while lower taxes increase consumer spending and investmen
QUESTION 2
Fiscal policy is a powerful tool. The key to its power is the Multiplier effect. (1:16
in the video)
QUESTION 3
In the video, there is a reference to supply-side economists, like Milton
Friedman. (2:10 in the video)
QUESTION 4
Varsity Cube 2024 +27 81 278 3372
Assignment 1 Semester 1 2025
Unique #:
Due Date: March 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, LEARNING UNIT 1
QUESTION 1
Fiscal policy involves the use of government spending and taxation (0:34 in the
video) to influence the economy.
Explanation
Key Components of Fiscal Policy:
1. Government Spending (G)
o Includes spending on infrastructure, education, healthcare, and
public services.
o Increased government spending stimulates economic growth by
increasing demand.
2. Taxation (T)
o Includes income tax, corporate tax, VAT, and other taxes.
o Higher taxes reduce disposable income and slow economic growth,
while lower taxes increase consumer spending and investmen
QUESTION 2
Fiscal policy is a powerful tool. The key to its power is the Multiplier effect. (1:16
in the video)
QUESTION 3
In the video, there is a reference to supply-side economists, like Milton
Friedman. (2:10 in the video)
QUESTION 4
Varsity Cube 2024 +27 81 278 3372
