mini Test 4_memo.pdf

8/17/2019 mini Test 4_memo.pdf

http://slidepdf.com/reader/full/mini-test-4memopdf 1/3

1

QUESTION 1 [9 Marks]

1.1 Assume South Africa’s inflation rate is at 2.8%. Identify three instruments that the SAgovernment can use to bring the inflation rate up to the target range of 3-6%. [3]

• reduce the reserve requirement/ daling in reserwe vereiste • buying govt bonds/ koop staatseffekte • decrease repo rate/ daling in repokoers • increase Credit ceilings

any three

1.2 Illustrate, by making use of a graph, the impact of any one action you gave in 1.1 on1.2.1 real sector of the economy. [3]

1.2.2 monetary sector of the economy [3]

1 mark for correct labelling

EECF1624

UNIVERSITY OF THE FREE STATE

DEPARTMENT OF ECONOMICS

MINI TEST 4

DATE: 21 SEPTEMBER 2015

LECTURER: Ms. C. CAMPHER/

Mr. C. MUDZINGIRI (Qwa Qwa)

DURATION: 1 HOUR MARKS: 25

TE = Y

CPI

AD2

AD1

GDP

Md

MsMsMs1

Ms

Y

TE

TE

TE1

i

Q of Money





QUESTION 4 [5 Marks]

4.1 The Table below shows information for UV Commercial Bank on two distinct years.

% cash reserve

requirement ratio Deposit

Total

reserves

Excess

reserves Total credit created

25 40 000 0 A

B 300 000 30 000 6 000 C

4.1 Calculate the values for A,B and C [3]

A=4x40000=160 000

B=24000/300 000X100= 8 %

C=300 000x10= 3 000 000

4.2

Reserve requirement/ reserwevereiste

Repo rate/ repokoers

Buy/ selling of bonds (Open market operations)/ koop/verkoop van staatseffekte (opemarktransaksies)

Credit ceilings/ kredietplafonne

Any two

Documents

mini Test 4_memo.pdf