Macroeconomics Answers

A sudden increase in the number of tourists from South Africa to United States (US) will lead to…
[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.

A change of the exchange rate from R14,60 = $1,00 to R20,50 = $1,00 will lead to a decrease in...
[1] the price of imported goods in South Africa.
[2] the price of South African products sold in the United States.
[3] the price of petrol in South Africa.
[4] the number of tourists from the United States visiting South Africa.

Question 15 is based on the table below which shows the production of maize and bananas for
country 1 and 2:
Maize Bananas
Country 1 400kg 200kg
Country 2 900kg 300kg
15. To benefit from trade country 1 should produce_____ and country 2 should
produce___________.
[1] bananas; maize
[2] maize; bananas
[3] maize; maize
[3] cannot be determined

Question 14 is based on the table below which shows information about income tax paid by Susan
in the last four years:
Year Salary Tax A Tax B
2019 R500 000 R 75 000 R22 500
2018 R300 000 R48 000 R19 500
2017 R200 000 R34 000 R15 500
2016 R90 000 R16 200 R10 800
14. Which of the following is correct?
[1] Tax A is an example of a regressive tax.
[2] Tax B is an example of a progressive tax.
[3] Tax A is an example of a proportional tax.
[4] Tax B is an example of a proportional tax.

Which of the following is incorrect regarding government spending?
[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).

11. Which of the following could be expected when the government applies a contractionary fiscal
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
12. Which one of the following statements regarding taxation is correct?
[1] Neutrality of tax means that compliance and administration costs are kept as low as possible.
[2] Taxes which induce taxpayers to change their behaviour are not neutral.
[3] The aim of taxes is to distort relative prices and change the behaviour of taxpayers.
[4] The tax burden is spread equally amongst taxpayers.

Which of the following statements is incorrect regarding the quantity of money?
[1] The quantity of money is determined by the interaction of the demand for money and interest
rate.
[2] If the interest rates are high, the quantity of money demanded will tend to low.
[3] If interest rates are low, the quantity of money demanded will tend to be high.
[4] There is a positive relationship between interest rates and the quantity of money demanded.

9. Which of the following statements concerning money is correct?
[1] The value of money is not based on the confidence that both government and monetary
authorities will be able to control the supply to achieve stability and that the purchasing
power does not fall.
[2] Paper money was developed since specialisation between countries led to increases in
trade, causing the use of coin to be inconvenient as this was difficult to handle and not safe
to transport.
[3] Credit cards are money because they function as a medium of exchange.
[4] Electronic money is another form of money as it can be used as a means of payments.

6. Given the following information in the table, which option is correct?
Coins R60 000
Notes R150 000
Demand deposits R300 000
Quasi money R400 000
M3 2 000 000
Long-term deposits ?
[1] Long-term deposits are equal to R1 090 000
[2] M1 is R210 000
[3] Cash is R150 000
[4] M2 is R610 000
7. We can expect that the amount of money that a bank create will decrease when…
[1] more bank clients choose to deposit their funds at the bank.
[2] the bank's clients choose to hold a smaller part of their money in the form of cash.
[3] the bank borrows from the South African Reserve Bank.
[4] the South African Reserve Bank increases the repo rate.

Which of the following is NOT a scarce production input?
[1] land available for residential housing
[2] factories that produce fabric masks
[3] money to buy tools and pay workers
[4] people available to work or start a business