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EECF62406

UNIVERSITY OF THE FREE STATE

DEPARTMENT OF ECONOMICS

SEMESTER TEST 1

DATE: 9 SEPTEMBER 2014

LECTURERS: MS. C. CAMPHER/MR. C. MUDZINGIRI

MODERATOR: DR. N. KEYSER

DURATION: 1 HOUR MARKS: 50 

Instructions:

•  This paper consists of 3 questions on 4 pages.

•  Answer all the questions.

•  Read the questions carefully and please write legibly.

•  Show all calculations where necessary.

QUESTION 1 [7x2 = 14 marks]

Answer Question 1 in your answer book. Write the letter of your choice next to the

question number (e.g. 1.1 A or 1.1 B).

1.1 In the four-sector circular flow model, households will use their incomes to do all of the

following except:

A.  saving.

B.  paying taxes.

C.  investing.

D.  buying imported goods and services.

1.2 If the CPI was 132.5 at the end of 2006 and 140.2 at the end of 2007, the inflation rate

during 2007 was:

A. 

5.8%B. 

5.4%

C.  7.7%

D.  4.4%

1.3 For an economy at full employment, an increase in the price of oil shifts the:

A.  short-run aggregate supply curve to the left, raising the price level and decreasing

potential real GDP

B.  short-run aggregate supply curve to the right, raising the price level and decreasing

actual real GDP so it is less than potential real GDP

C.  short-run aggregate supply curve to the left, raising the price level and decreasing

actual real GDP so it is less than potential real GDP

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D.  long-run aggregate supply curve to the left, decreasing actual real GDP and increasing

potential real GDP

1.4 If C = 40 + 0.8Y; I = 60 – 2i; and interest rates(i) = 5. The value of the equilibrium

income assuming a private, closed economy is:

A. 

200B.  550

C.  450

D.  500

1.5 Suppose that the unemployment rate is 15%. Four million people fall into the “frictional

unemployment” category, 16 million are classified as “structurally unemployed” and the

economy is operating at full employment. Assume that there are no discouraged workers.

Then the total number of employed people in this economy is approximately:

A.  20 million.

B.  113 million

C. 

12 millionD.  134 million.

1.6 Graphically, demand-pull inflation is shown as a:

A.  rightward shift of the AD curve in the horizontal range of the AS curve.

B.  rightward shift of the AS curve in the intermediate range of the AD curve.

C.  leftward shift of the AS curve in the intermediate range of the AD curve.

D.  rightward shift of the AD curve in the intermediate or vertical range of the AS curve.

1.7 Answer the next question on the basis of the following information for a private, closed

economy, where I= Investment, S is saving, and Y is gross domestic product (GDP)

 I = 80; S = -80 + 0.4Y

The equilibrium GDP(Y) will be:

A.  R160

B.  R400

C.  R360

D.  R480

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QUESTION 2 [24 marks]

2.1 In reality, the South African economy can either be on the Keynesian or intermediate or

classical range of the aggregate supply curve. Explain briefly, with the aid of 3 separate

graphs, what will be the effect of an increase in spending on social grants by the

government of South Africa on the price level and output levels in each of the threecases? Clearly indicate in each graph which phase of the aggregate supply curve you are

using.[12]

2.2 Make use of the following information to answer the questions below:

C= 200 + 0.72Yd I = 900 X = 200

M = 100 + 0.2Y G = 700

2.2.1 Briefly explain what exactly the 200 and 0.72 in the consumption function mean. [2]

2.2.2 Calculate the value of the expenditure multiplier. [2]

2.2.3 Calculate the value of equilibrium income. [2]2.2.4 Assume the value of the marginal propensity to import decreases to 0.11. How will

this change influence the slope of the total spending function? [1]

 

2.3 Consider the following information of the economy of Horizon Deep and answer the

questions that follow:

Autonomous consumption = 2000

Marginal Propensity to Consume = 0.6

Investment Expenditure = 750

Exports = 2000

Imports = 1200+ 0.1Y

Autonomous tax=200Tax rate= 0.2

Government Expenditure = 800

2.3.1  Write down the Total Expenditure function for this economy and illustrate this

graphically. [6]

2.3.2  Determine the level of income where exports will be equal to the imports for this

economy. [2]

QUESTION 3 [12 marks]

3.1 The table below shows information on the South African economy. Use the information

in the table to answer questions 3.1.1 and 3.1.2

3.1.1 

Calculate the missing values; (i), (ii) and (iii) [5]3.1.2  Calculate the inflation rate in 2010? [2]

Year  Nominal GDP 

(R billions) 

Real GDP 

(R billions) 

CPI 

2009 2,406 (i)  84.6

2010 (ii)  3,014 88.2

2011 2,917 3,150 (iii) 

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3.2 Name any two problems associated with measuring Gross Domestic Product. [2]

3.3 Economists in South Africa suggest that the rise in the July 2014 inflation to 6.6% is

mainly driven by the increase in the price of fuel. What type of inflation is caused by an

increase in the fuel price? [1]3.4 Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1

million of them become discouraged over their job prospects and cease to look for work.

What will happen to the official unemployment rate as a result of this? Explain briefly.

  [2]

TOTAL = 50

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EECF62406

UNIVERSITEIT VAN DIE VRYSTAAT

DEPARTEMENT EKONOMIE

SEMESTER TOETS 1

DATUM: 9 SEPTEMBER 2014

DOSENTE: MS. C. CAMPHER/MR. C. MUDZINGIRI

MODERATOR: DR. N. KEYSER

TYD: 1 UUR PUNTE: 50 

Instruksies:

•  Die toets bestaan uit 3 vrae op 4 bladsye.

•  Beantwoord al die vrae.

•  Lees die vrae noukeurig en skryf asseblief netjies.

•  Toon al berekeninge aan waar nodig.

VRAAG 1 [7x2 = 14 punte] 

Beantwoord Vraag 1 in u antwoordboek. Skryf die letter van u keuse langs die

vraagnommer (bv. 1.1 A of 1.1 B).

1.8 In die vier-sektor kringloopmodel, sal huishoudings hulle inkomste gebruik vir al die

volgende behalwe vir:

E. spare.

F. belasting betalings.

G. investering.

H. koop van ingevoerde goedere en dienste.

1.9 Indien die VPI 132,5 was aan die einde van 2006 en 140,2 aan die einde van 2007, was

die inflasiekoers gedurende 2007:

A. 5.8%

B. 

5.4%

C. 7.7%

D. 4.4%

1.10  Vir 'n ekonomie by volle indiensname, sal 'n toename in die prys van olie die:

A. korttermyn AS kurwe na links skuif, en ‘n verhoging van die prysvlak en daling in

potensiële reële BBP veroorsaak.

B. korttermyn AS kurwe na regs skuif, en ‘n verhoging van die prysvlak en daling in

werklike reële BBP veroorsaak sodat dit minder is as potensiële reële BBP.

C. korttermyn AS kurwe na links skuif, en ‘n verhoging van die prysvlak en daling in

werklike reële BBP veroorsaak sodat dit minder is as potensiële reële BBP.

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D. langtermyn AS kurwe na links skuif, en ‘n vermindering van die werklike reële BBP

en toename in die potensiaal reële BBP veroorsaak.

1.4 Indien C = 40 + 0.8Y; I = 60 – 2i; en rentekoerse (i) = 5. Veronderstel ‘n private, geslote

ekonomie, is die waarde van die ewewigsinkomste:

E. 

200F. 550

G. 450

H. 500

1.5 Veronderstel die werkloosheidskoers is 15%. Vier miljoen mense is deel van die

“wrywingswerkloosheid” kategorie, 16 miljoen is geklassifisieer as “struktureel

werkloos” en die ekonomie is by volle indiensnamevlak. Veronderstel daar is geen

ontmoedigde werkers nie. Die totale hoeveelheid mense indiensgeneem in hierdie

ekonomie is ongeveer:

E. 20 miljoen.

F. 

113 miljoenG. 12 miljoen

H. 134 miljoen.

1.6 Grafies word vraag-trek inflasie geillustreer as ‘n:

A. regswaartse skuif van die AD kurwe in die horisontale area van die AS kurwe.

B. regwaartse skuif van die AS kurwe in die middelste area van die AD kurwe.

C. linkswaartse skuif van die AS kurwe in die middelste area van die AD kurwe.

D. regwaartse skuif van die AD kurwe in die middelste of vertikale area van die AS

kurwe.

1.7 Beantwoord die volgende vraag op grond van die gegewe inligting vir ‘n private, geslote

ekonomie, waar I = Investering, S spare, en Y bruto binnelandse produk (BBP) is.

 I = 80; S = -80 + 0.4Y

Die ewewigs BBP(Y) is:

E.  R160

F.  R400

G.  R360

H.  R480

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VRAAG 2 [24 punte] 

2.1 In werklikheid, kan die Suid-Afrikaanse ekonomie óf op die Keynesiaanse of

intermediêre of klassieke reeks van die totale aanbodkurwe lê. Verduidelik kortliks, met

die hulp van 3 afsonderlike grafieke, wat die effek van 'n toename in besteding aan

maatskapliketoelaes deur die regering van Suid-Afrika op die prysvlak en uitsetvlakke inelk van die drie gevalle sal wees. Dui duidelik in elke grafiek watter fase van die totale

aanbodkurwe jy gebruik.

[12]

2.2 Maak gebruik van die volgende inligting om die vrae wat volg te beantwoord:

C= 200 + 0.72Yd I = 900 X = 200

M = 100 + 0.2Y G = 700

2.2.1 Verduidelik kortliks wat presies die 200 en die 0.72 in die verbruikersfunksie beteken.

[2]

2.2.2 Bereken die waarde van die bestedigingsvermenigvuldiger. [2]2.2.3 Bereken die waarde van die ewewigsinkomste. [2]

2.2.4 Veronderstel die waarde van die marginale geneigheid om in te voer daal na 0.11. Hoe

sal hierdie verandering die helling van die totale bestedegingsfunksie beinvloed? [1]

2.3 Oorweeg die volgende inligting oor die ekonomie van Horizon Deep en antwoord die

vrae wat volg:

Outonome verbruiksbesteding = 2000

Marginale geneigheid om te verbruik = 0.6

Investering = 750

Uitvoere = 2000

Invoere = 1200+ 0.1Y

Outonome belasting = 200

Belastingkoers = 0.2

Regeringsbesteding = 800

2.3.1 Skryf neer die Totale bestedigingsfunskie (TE) vir hierdie ekonomie en illustreer dit

grafies. [6]

2.3.2 Bepaal die waarde van inkomste waar uitvoere gelyk sal wees aan invoere vir hierdie

ekonomie. [2]

VRAAG 3 [12 punte] 

3.1 Die tabel hieronder toon inligting oor die Suid Afrikaanse ekonomie. Maak gebruik van

die inligting in die tabel om vrae 3.1.1 en 3.1.2 te beantwoord.

Jaar  Nominale BBP (R

billions) 

Reële BBP 

(R billions) 

VPI 

2009 2,406 (i)  84.6

2010 (ii)  3,014 88.2

2011 2,917 3,150 (iii) 

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3.3.1  Bereken die ontbreekte waardes; (i), (ii) en (iii) [5]

3.3.2  Bereken die inflasiekoers vir 2010? [1]

3.4 Noem enige TWEE probleme wat verband hou met die meting van die Bruto Binnelandse

Produk. [2]

3.5 

Ekonome in Suid-Afrika dui daarop dat die styging in die Julie 2014 inflasie na 6,6% ishoofsaaklik gedryf deur die toename in die prys van brandstof. Watter tipe inflasie is

veroorsaak deur 'n toename in die brandstofprys?  [1]

3.6 Veronderstel daar is 5 miljoen werkloses wat werk soek. Na verloop van tyd word 1

miljoen van hulle mismoedig oor hul werksvooruitsigte en hou op om werk te soek. Wat

sal met die amptelike werkloosheidskoers gebeur as gevolg hiervan? Verduidelik kortliks

  [2]

TOTAAL = 50