Answer to Question #318349 in Macroeconomics for @2kz

Question

What impact did an increase in prices of petrol, dissel have in the South African economy as a whole...which sectors affected the most as due to the War in between Russia and Ukrain

Answer 1

An increase in the fuel levy might lead to households experiencing decreased income, employment and returns to factors used for production. Similarly, it leads to an increase in externalities, increasing returns in the production of output and diminishing returns in the production of new knowledge. Therefore, an increase in the prices of diesel and petrol reduces the purchasing power of money that in turn has an adverse impact on consumers' welfare. The most affected sectors in South Africa due the outbreak of war in Ukraine are the oil sector, edible oil, the agriculture sector, automobile sector, and base metals.