Macroeconomics Answers

Question 1 (20 marks)

Write an essay in which you critically evaluate how South Africa is performing with regard to the five (5) main macroeconomic objectives.

Question 1 (15 marks) the questions that follow:

Commodity prices have been increasing on the world market. South Africa is a major exporter of commodities such as gold and platinum.

1.1 Use a foreign exchange diagram to illustrate and explain the effect of the increase in commodity prices on the rand–dollar exchange rate, ceteris paribus. (10 marks)

1.2 Define the terms of trade, and explain how the terms of trade will be affected in South Africa by the increase in commodity prices. (5 marks)

What is the multiplier

1.) Predict how each of the following economic changes will affect (separately) the equilibrium price and quantity in the financial market for home loans. Sketch a demand and supply diagram to support your answers.

1. The number of people at the most common ages for home-buying increases.
2. People gain confidence that the economy is growing and that their jobs are secure.
3. Banks that have made home loans find that a larger number of people than they expected are not repaying those loans.
4. Because of a threat of a war, people become uncertain about their economic future.
5. The overall level of saving in the economy diminishes.
6. The federal government changes its bank regulations in a way that makes it cheaper and easier for banks to make home loans.

If the required reserve ratio is reduced from 10% in 2020 to 5% in 2021 and the central buys $29.0M worth of securities in 2021, what will be the maximum potential increase in the money supply

What is the relationship between the US dollar index, 30 year T bond prices and T bond interest rates? I know bond prices and interest rates are inversely correlated but please explain their relationship with the US dollar.

Explain FIVE ways that imports and exports can benefit a company like Volkswagen

How are the Exchange rate Determined ? What are the reasons in fluctuations in the exchange rate ? How the monetary policy of a country affect the exchange rate ?

What is Phillip curve ? Can Policy makers exploit the Phillip curve relationship by Trading more inflation for less unemployment in the short run, in the long run ?

Demand and supply conditions in the market for unskilled labor are important concerns to business and government decision makers. Illustrate in a supply/demand diagram, by shifting the supply curve appropriately, the effect on the supply of unskilled labor a result of: 

A. An increase in the quality of secondary education 

B. A rise in welfare benefits 

C. An increase in the popularity of self-service gas stations, car washes, and so on D. An increase in the minimum wage