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39. Suppose the economy of South Africa is experiencing rapid increase of price level. The economy is at equilibrium at an income level of R950 billion, which is above the full-employment level of income (Yf) of R900 billion. The marginal propensity to consume is 0,75. If the government wishes to close the income gap and slow down the increase in the price level, it should…
[1] cut its spending by R50 billion.
[2] cut its spending by R200 billion.
[3] raise its spending by R50 billion.
[4] cut its spending by R12,5 billion.
40. Fiscal policy includes…
a) policy on government spending on official travel allowances of politicians.
b) policy on consumption taxes such as those on cigarettes.
c) policy on salaries paid to government employees and politicians.
[1] a and b
[2] b and c
[3] b
[4] a, b and c
If
24. If output remains the same, a change in nominal GDP from 2018 to 2019 represents…
[1] economic growth.
[2] an increase in unemployment.
[3] an increase in production.
[4] an increase in the price level.
25. Which one of the following statements is correct regarding consumption and saving in the
Keynesian model?
[1] If total consumption exceeds total income, this is an indication of dissaving.
[2] If the initial income is zero, then total consumption will be equal to total saving.
[3] Given that income does not decrease, a decrease in consumer spending will result in a proportional decrease in saving.
[4] If autonomous consumption increases, consumer spending will remain the same, ceteris paribus.
[1] shoes worn by the manager of a shoe store
[2] a loaf of bread that is served to hotel guests
[3] a lawnmower used by Thomas to mow his family’s lawn
[4] apples used for cooking and to make juice for hotel guests
[1] an appreciation of the dollar and a leftward shift of the supply of Rand curve on the US
foreign exchange market.
[2] a depreciation of the dollar and a leftward shift of the supply of Rand curve on the US foreign
exchange market.
[3] an appreciation of the dollar and a rightward shift of the supply of Rand curve on the US
foreign exchange market.
[4] a depreciation of the dollar and a rightward shift of the supply of Rand curve on the US
foreign exchange market.
[1] Promises by the government during elections could put pressure on government spending.
[2] Government spending largely consists of spending on investment (capital goods).
[3] The government promotes income redistribution through taxation and government transfers.
[4] In a mixed economy the government can intervene by providing funds for public goods and
services (like parks and defence).
policy?
[1] a decrease in the tax rate
[2] a decrease in the interest rate
[3] an increase in government spending
[4] a decrease in the budget deficit
Assume that interest rates fall. Under what circumstances will this lead to (a) a large rise in business investment; (b) little or no change in business investment?
Using the data above, answer the following questions.
a) Prepare a chart that compares India, Spain, and South Africa based on the data you find. Describe the key differences between the countries. Rank these as high-, medium-, and low-income countries, explain what is surprising or expected about this data.
Use the Rule of 72 to estimate how long it will take for India, Spain, and South Africa to double their standards of living.
