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Assessment 1: Videos and Questions
The module ECS2602 consists of three interrelated sections.
Section one:
This section consists of learning units 1 to 4, and we develop the IS-LM model for a closed economy.
Through the IS-LM model, you will understand how the demand for goods determines the level of
output and income and the role of fiscal and monetary policies in influencing the demand for goods
and, hence, the level of output and income. In the IS-LM model, the focus is on the role of the
demand for goods. We assume that firms are willing to supply any quantity at a given price – in
other words, we ignore supply constraints.
Section two:
A closed economy does not participate in international trade, while an open economy has significant
trade and financial relationships with other economies. In section two (learning units 5 to 7), we
extend the IS-LM model to deal with output and income determination in an open economy and
consider the role of fiscal and monetary policy in such a model. In learning unit 5, several key
concepts and relationships are introduced. In learning unit 6, with learning unit 2 as background, the
focus is on the demand for goods in an open economy. Learning Unit 7 focuses on determining the
level of output for an open economy using the IS-LM model. Note the importance of the IS-LM
model (learning unit 4) as a building block.
Section three:
In this section (learning units 8 and 9), the economy's supply side is added, and we return to a closed
economy. You will learn how the level of output and income is determined in the medium run. In
learning unit 8, you will be introduced to the labour market, and in learning unit 9, we will build on it
to derive the relation between inflation and unemployment, known as the Phillips curve. All the
parts will be put together to determine the level of output and income, as well as unemployment
and inflation, both in the short and medium run. In addition, we will once again consider the role of
the combination of fiscal and monetary policy in such a world. The IS-LM model (learning unit 4) is a
critical building block of this IS-LM-PC model.
Assessment 1 is based on learning units 1, 2 and 3 (60 marks)
Given the above explanation, you will understand the importance of Assessment 1 since it is the
building block of the whole syllabus. If you do not understand the goods and financial markets, you
will find the rest of the learning units challenging to follow.
Learning Unit 1 focuses on important macroeconomic aspects such as economic growth and its
measurement - gross domestic product (GDP), inflation, stabilisation policies, and unemployment.
Learning Unit 2 looks at the goods market, and Learning Unit 3 focuses on the financial market.
The videos and recorded online lessons explain essential parts of the prescribed work and help you
better understand certain economic concepts and how the different macroeconomic models
interrelate.
1|Page
, How to complete Assignment 1:
Print pages 2 to 6 of the assignment, complete the 30 fill-in questions in the spaces
provided, scan it and upload the assignment on the ECS2602 module site on myUnisa as
a PDF document. No email submissions will be accepted.
Learning Unit 1 (18 marks)
Watch the following video and answer questions 1 to 5 based on the video. (8 marks)
When answering the questions, use the exact words as the presenter.
The Difference Between Fiscal and Monetary Policy (youtube.com)
Same video: different link: https://youtu.be/o0Yt6buayZ4?si=YdiNNhPB5sn_XSJC
Question 1:
government spending
According to the video, fiscal policy is the use of __________________________________and
taxation
__________________________ to influence the economy. (2)
Question 2:
multiplier effect
Fiscal policy is a powerful tool. The key to its power is the _____________________________. (1)
Question 3:
milton freedman
In the video, there is a reference to supply-side economists, like _____________________________.
(1)
Question 4:
central banks
Monetary policy is the way _____________________________ influences the economy through the
management of the _____________________________
money supply interest rates
and ______________________________.
(3)
Question 5:
Federal Reserve
The central bank system in the United States is called the ________________________________.
(1)
Work through LU 1 of the study guide and answer questions 6 to 11. (10 marks)
Question 6:
In the video the more traditional financial market is explained where it is assumed that the central
bank is in control of the money supply, in other words, the exogenously determined money
approach. In our particular financial market in ECS2602 module, we follow the endogenously
determined money approach where expansionary monetary policy in South Africa entails a(n)
decrease
_________________ increase
in the interest (repo) rate in order to ________________ the demand for goods
increase
in the economy and or a(n) __________________________ in the level of output and income. (3)
Question 7:
Which one of the following statements is not a macroeconomic issue?
A. The unemployment rate in South Africa, according to the strict definition, was 28.18% in 2019.
2|Page
+27737560989
for FAC MAC ECS DSC TAX QMI FIN INV BNU STA
tutorials
Assessment 1: Videos and Questions
The module ECS2602 consists of three interrelated sections.
Section one:
This section consists of learning units 1 to 4, and we develop the IS-LM model for a closed economy.
Through the IS-LM model, you will understand how the demand for goods determines the level of
output and income and the role of fiscal and monetary policies in influencing the demand for goods
and, hence, the level of output and income. In the IS-LM model, the focus is on the role of the
demand for goods. We assume that firms are willing to supply any quantity at a given price – in
other words, we ignore supply constraints.
Section two:
A closed economy does not participate in international trade, while an open economy has significant
trade and financial relationships with other economies. In section two (learning units 5 to 7), we
extend the IS-LM model to deal with output and income determination in an open economy and
consider the role of fiscal and monetary policy in such a model. In learning unit 5, several key
concepts and relationships are introduced. In learning unit 6, with learning unit 2 as background, the
focus is on the demand for goods in an open economy. Learning Unit 7 focuses on determining the
level of output for an open economy using the IS-LM model. Note the importance of the IS-LM
model (learning unit 4) as a building block.
Section three:
In this section (learning units 8 and 9), the economy's supply side is added, and we return to a closed
economy. You will learn how the level of output and income is determined in the medium run. In
learning unit 8, you will be introduced to the labour market, and in learning unit 9, we will build on it
to derive the relation between inflation and unemployment, known as the Phillips curve. All the
parts will be put together to determine the level of output and income, as well as unemployment
and inflation, both in the short and medium run. In addition, we will once again consider the role of
the combination of fiscal and monetary policy in such a world. The IS-LM model (learning unit 4) is a
critical building block of this IS-LM-PC model.
Assessment 1 is based on learning units 1, 2 and 3 (60 marks)
Given the above explanation, you will understand the importance of Assessment 1 since it is the
building block of the whole syllabus. If you do not understand the goods and financial markets, you
will find the rest of the learning units challenging to follow.
Learning Unit 1 focuses on important macroeconomic aspects such as economic growth and its
measurement - gross domestic product (GDP), inflation, stabilisation policies, and unemployment.
Learning Unit 2 looks at the goods market, and Learning Unit 3 focuses on the financial market.
The videos and recorded online lessons explain essential parts of the prescribed work and help you
better understand certain economic concepts and how the different macroeconomic models
interrelate.
1|Page
, How to complete Assignment 1:
Print pages 2 to 6 of the assignment, complete the 30 fill-in questions in the spaces
provided, scan it and upload the assignment on the ECS2602 module site on myUnisa as
a PDF document. No email submissions will be accepted.
Learning Unit 1 (18 marks)
Watch the following video and answer questions 1 to 5 based on the video. (8 marks)
When answering the questions, use the exact words as the presenter.
The Difference Between Fiscal and Monetary Policy (youtube.com)
Same video: different link: https://youtu.be/o0Yt6buayZ4?si=YdiNNhPB5sn_XSJC
Question 1:
government spending
According to the video, fiscal policy is the use of __________________________________and
taxation
__________________________ to influence the economy. (2)
Question 2:
multiplier effect
Fiscal policy is a powerful tool. The key to its power is the _____________________________. (1)
Question 3:
milton freedman
In the video, there is a reference to supply-side economists, like _____________________________.
(1)
Question 4:
central banks
Monetary policy is the way _____________________________ influences the economy through the
management of the _____________________________
money supply interest rates
and ______________________________.
(3)
Question 5:
Federal Reserve
The central bank system in the United States is called the ________________________________.
(1)
Work through LU 1 of the study guide and answer questions 6 to 11. (10 marks)
Question 6:
In the video the more traditional financial market is explained where it is assumed that the central
bank is in control of the money supply, in other words, the exogenously determined money
approach. In our particular financial market in ECS2602 module, we follow the endogenously
determined money approach where expansionary monetary policy in South Africa entails a(n)
decrease
_________________ increase
in the interest (repo) rate in order to ________________ the demand for goods
increase
in the economy and or a(n) __________________________ in the level of output and income. (3)
Question 7:
Which one of the following statements is not a macroeconomic issue?
A. The unemployment rate in South Africa, according to the strict definition, was 28.18% in 2019.
2|Page
