ECS1601 Assignment 4 (DETAILED ANSWERS) 2025 - DISTINCTION GUARANTEED

ECS1601 Assignment 4 (DETAILED ANSWERS) 2025 - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED Answers, guidelines, workings and references ,... Question 1 [7 Marks] (Word Count = 100) With reference to the Circular flow model as well as economic growth, detail and discuss two interventions that would most effectively support economic resilience in Mitchells Plain? Question 2 [18 Marks] (Word Count = 450) Study the image showing Dr. David |. Ramadan’s X post and the background to answer the questions 2.1 to 2.3. “ Dr. David I. Ramadan xX y @DavidiRamadan - Follow Congratulations to all #Trump voters—thanks to your dear leader's #tariff tantrum, nearly everything we buy will cost about 20% more in the coming year. And no, “just buy American” isn't a fix—most of these items have no U.S. equivalent. That's just the short-term hit. 3 : ~ 3:08 AM - Apr 3, 2025 @ Page 3 of 5 ECS1601 | Assessment 04 | Year 2025 A university of south africa UNISA Background In April 2025, US President Donald J Trump, implemented reciprocal tariffs for countries that traded with the USA. This is to address the United States’ $1.3 Trillion (~R 22.84 trillion) Trade Deficit'. Amongst the countries that were levied the highest tariff include South Africa’s neighbouring country, the Kingdom of Lesotho, with a tariff of approximately 50%. In addition, the Republic of South Africa was also levied a tariff of approximately 30% within the same time period and came into effect in August 2025. You are an economics 1 student from UNISA and overhear some of your peers at the Spaza shop discussing the matter and stating that it might not be a bad thing, “Donald Trump is doing well to help his country”. Question 2.1. [8 Marks] As an economic student explain to them why this is not a good thing from the perspective of Economic Growth for Republic of South Africa and/or Kingdom of Lesotho, using the AD-AS model. In your response, clearly explain the effects on aggregate demand and/or aggregate supply, and illustrate how this translates to changes in real GDP and price levels. Question 2.2. [7 Marks] As an economics student explain to them why this is a good thing for the United States of America, from the perspective of the foreign exchange market and the Net-Exports. Demonstrate your point with the use of the Keynesian Model graph. Question 2.3. [3 Marks] In understanding the Monetary Transmission Mechanism, detail the impact of the repo rate decrease on the multiplier given the above US interventions Question 3 [10 Marks] (Word Count = 200) Question 3.1. and 3.2. are based on the following passage sourced from Statistics South Africa [2025]: 1 Wall Street Journal [2025]., The Countries Driving America’s $1.2 Trillion Trade Deficit in Goods. Washington. Url: August 2025 Page 4o0f 5 ECS1601 | Assessment 04 | Year 2025 university of south africa UNISA fxn Capitec CEO Mr Fourie had suggested that the actual unemployment rate, which Stats SA reports at 32.9%, may be closert o 10%, based on observations of informal economic activity Source: Statistics South Africa (2025)., Stats SA Engages Capitec on Labour Statistics and Informal Sector Dynamics., Pretoria. , Retrieved from: https: /Asa. servations%200f%20informal%20economic%20activity. Accessed: 08 August 2025 Question 3.1. [3 Marks] Define what Economists mean by the official unemployment rate presented in the source above. Question 3.2. [7 Marks] From your definition above, recall the reason as to why the CEO of Capitec is incorrect in his statement that the unemployment rate is 10%. Question 4 [15 Marks] (Word Count = 200) Study the following extract to answer questions 4.1. and 4.2. For the second year in a row, Treasury has left personal income tax brackets and rebates unchanged -— effectively handing South Africans a stealth tax in this year’s Budget. it will be felt in the take-home pay of salaried workers, particularly those in the lower- to middle-income bracket, warns Carla Rossouw. The decision to leave personal income tax brackets and rebates the same in the 2025/2026 tax year is a blow to taxpayers, squeezing lower- to middle-income earners further. Source: Rossouw., C., (2025) Earning more, taking home less: The hidden tax hike in this year’s Budget. Johannesburg. Retrieved from: https:/A personal-investing/earning-more-taking-home-less-the-hidden-tax-hike-in-this-yearsbudget/ Accessed: 08 August 2025 Question 4.1. [10 Marks] Using the Keynesian Model for South Africa (as a close economy with a public sector) discuss and denote the implications of the above statements. Your discussion should include a diagram and/or Algebraic expression. Question 4.2. [5 Marks] Given the ramifications detailed in the extract above, evaluate the impact of the above (4.1 answer) from the perspective of the Phillips Curve relation and how it will affect South Africa’s income inequality problem.