Macroeconomics Answers

Country A can produce 20 units of maize or 10 units of bananas. Country B can produce 30 units of maize or 20 units of bananas.
Assuming constant opportunity costs, which of the following statements are correct?
a. Country B has an absolute advantage in the production of maize.
b. Country B has an absolute advantage in the production of bananas.
c. Country A has a relative advantage in the production of bananas.
[1] All the statements are correct.
[2] a and b
[3] a and c
[4] b and c
[5] c

An increase in criminal activity in South Africa acts as a deterrent to foreign tourists considering visiting South Africa, and as a result, there is a decline in the number of American tourists to South Africa.
Explain, with the aid of a graph, the effect of this on the rand/dollar exchange rate and the equilibrium quantity of dollars.

An increase in criminal activity in South Africa acts as a deterrent to foreign tourists considering visiting South Africa, and as a result, there is a decline in the number of American tourists to South Africa.
Explain, with the aid of a graph, the effect of this on the rand/dollar exchange rate and the equilibrium quantity of dollars.

: What microeconomic issues have been in the news lately?read dawn newspaper of last 4 modays

Royta Ltd, operates in the commercial painting industry. They have reluctantly come to the
conclusion that some of their older equipment is reaching the end of its productive life and will
need to be replaced sooner or later. They need your assistance in determining their
cost of capital in order to make this decision.
Their present capital structure is as follows:
 1 200 000 R2 ordinary shares now trading at R2,20 per share.
 80 000 preference shares trading at R1.80 per share (issued at R2 per share). Interest
at 10% p.a.
 A bank loan of R 1 000 000 at 10.5% p.a. (payable in 3 years’ time)
Additional data
a. The company’s beta is 1.4. A return on market of 12% is accepted and a risk free rate
of 7% is applicable.
b. The current tax rate is 30%
c. The company’s current dividend is 43c per share and they expect their dividends to
grow by 7% p.a.
Required:
4.1 Assuming that the company uses the CAPM to calculate its cost of equity. Calculate its
weighted average cost of capital. (17

The respective elasticities of demand and supply for a product are -0.55 and 1. Further, it is observed that the price of this commodity is K80 whilst the prevailing quantity in the market is 950.
a) By adopting a demand and supply concept of
Qd = a + bP
Qs = c + dP

Use the information provided to estimate the values of a,b,c and d. [5 Marks]
b) Using the estimated parameters, find the equilibrium price and quantity. [5 Marks]
c) At the equilibrium point, which is more elastic, demand or supply? [5 Marks]

Which tool would SARB use to achieve inflation targets