Macroeconomics Answers

Explain, with the aid of a graph, what will happen to the rand-dollar exchange rate and the equilibrium quantity of dollars if South Africa's exports to United States increase

Prior to the COVID-19 pandemic, South Africa’s national income was

reported at R3 billion, and in 2021, owing to restrictions implemented to ease the spread of infections, national income reduced to R1.5 billion. Assume that the marginal propensity to save equals 0.3. a) By how much should government spending be increased to bring output/or income to its pre- pandemic levels? [7 marks b) is your answer greater, or less, than the change in income and why? [3 marks]

2.3. COVID-19 adversely affected both our health and economic prospects, which in turn affected the behavior of economic agents—firms and households. Therefore, agents resorted to the ‘wait and see’ approach, which

means postponing consumption and investment due to increased uncertainty. a) what impact this change in behavior had on employment and output? b) what effect did it have on the aggregate demand? [Use diagrams to illustrate your responses]. [10 marks]

2.4. A stimulus package worth R500 billion was designed and by government of South Africa in 202 to keep businesses and households afloat. If the marginal propensity to consume equals 0.75, and R500 billion equals to the change in government spending (∆𝐺), how does change in government affected output and employment? [7 marks] Do you think the size of the multiplier is justifiable in the context of South Africa?

Explain with an aid of graph what happens to the rand/dollar exchange rate and the equilibrium quantity of dollars if south african exports to the united states increase

The rate of economic growth per capita in France from 1996 to 2000 was 1.9% per year, while in Korea over the same period it was 4.2%. Per capita real GDP was $28,900 in France in 2003, and $12,700 in Korea. Assume the growth rates for each country remain the same.

1. Compute the doubling time for France’s per capita real GDP.
2. Compute the doubling time for Korea’s per capita real GDP.
3. What will France’s per capita real GDP be in 2045?
4. What will Korea’s per capita real GDP be in 2045?

Explain, with the aid of a graph, what will happen to the rand/dollar exchange rate and the equilibrium quantity of dollars if South African exports to the United States increase.

(Hint: In your answer, also comment on the effect on the current account of the balance of payments as well as on the level of domestic prices.)

(Note: Four marks for the graph and six marks for the explanation.)

Explain, with the aid of a graph, what will happen to the rand/dollar exchange rate and the

equilibrium quantity of dollars if South African exports to the United States increase.

(Hint: In your answer, also comment on the effect on the current account of the balance of

payments as well as on the level of domestic prices.)

(Note: Four marks for the graph and six marks for the explanation.)

Explain how the price mechanism allocates resources in an economy