Answer to Question #113138 in Macroeconomics for December

Question

The cost of production in South African economy accelerated, due to rising prices of electricity and petrol in the country, which led to an increase in the prices of domestic goods and services relative to foreign goods and services. This will likely to a (n).........

1. Increase in the net export and aggregate spending in the SA economy
2. Increase in the demand of South African goods by foreign countries
3. Increase in the quantity of goods and services demanded in the SA economy
4. Decrease in the quantity of goods and services demanded in the SA economy

B. If the government decides to increase personal income tax to raise its tax revenue, what will be the impact on the economy?

1. Both the price level and the equilibrium level of real output will decrease
2. Both aggregate demand and aggregate supply will increase
3. Price level will increase, and total production will decrease
4. Price level will decrease, total production will increase

Answer 1

The correct answer are

4. Decrease in the quantity of goods and services demanded in the SA economy

1. Both the price level and the equilibrium level of real output will decrease