Macroeconomics Answers

If the marginal propensity to consume is 0,6 which of the following statements is correct?

a. It means that 60% of total income earned is saved.

b. It means that 60% of an increase in income will be used for consumption, while the remaining 40% will be saved.

c. It means that a change in income does not affect the marginal propensity to consume.

d. It means that 60% of the increase in income is saved, while the remaining 40% will be used for consumption.

The following factors contributed to South Africa being downgraded to junk status in 2017.

a)Debt incurred by stated-owned entities such as Eskom.

b)Corruption and increased public debt.

c)Lack of clarity regarding economic policy.

d)High economic growth.

a. only b

b. a, b and c

c. only d

d. c and d

What could the central bank do to lessen the effect of the depreciating rand?

a. supply less USD to the market

b. decrease the domestic interest rate

c. supply more USD to the market

d. supply more ZAR to the market

Unemployment remains a concern for South Africa’s future growth where 1.4 million job losses since the beginning of the COVID-19 affected low-skilled workers. Which type of unemployment gave rise to the high job losses of low skilled workers? Justify your answer.

Monetary policy will remain accomodative. Explain how the Repo system is used by the SARB as an accommodative policy approach.

a)              Assume a reputable firm which is tempted to temporarily deceive its customers by dropping the quality of its product in the present period but retain a high price, so that it derives a temporary high profit equal to B. Further assume that there is a P probability that after its customers realise that they have been cheated they never trust the firm again, so that the profits of the firm fall by X in perpetuity. Identify the relationship between B and X which will lead the firm to never deceive its customers.

Consider the following economy and use the Keynasian model to answer the succeeding questions.

C = 350 mil + 0.85Yd

I = 175 mil

G = 300 mil

X = 170 mil

Z = 120 mil

T = 0,15Y

Yf = R3100 million

Equilibrium Income: Y = C + I + G + (X - Z)

Disposable Income: Yd = (1 - t)Y

Question 1. Calculate the Mutiplier.

Consider the following economy and use the Keynasian model to answer the succeeding questions.

C = 350 mil + 0.85Yd

I = 175 mil

G = 300 mil

X = 170 mil

Z = 120 mil

T = 0,15Y

Yf = R3100 million

Equilibrium Income: Y = C + I + G + (X - Z)

Disposable Income: Yd = (1 - t)Y

Question 1. What is the value of the marginal propensity to consume in this model?

How much does the government collect in taxes when Economy is in equilibrium

Two major causes of declining business confidence