Macroeconomics Answers

Which one of the following statements regarding fiscal policy and the budget is
correct?
(2)
(a) When the government plans to stimulate economic activity, it can increase
spending or reduce taxes;
(b) Revenue from tax is always greater than government spending in South
Africa;
(c) Demand management only refers to fiscal policy;
(d) A contractionary fiscal policy should be implemented to combat
unemployment.

Which one of the following statements regarding fiscal policy and the budget is
correct?
(2)
(a) When the government plans to stimulate economic activity, it can increase
spending or reduce taxes;
(b) Revenue from tax is always greater than government spending in South
Africa;
(c) Demand management only refers to fiscal policy;
(d) A contractionary fiscal policy should be implemented to combat
unemployment.

Argue in favour of a policy of privatisation. .

Q.1.3 Which of the following represents stock variables? (2)
(a) Wealth, saving and unemployment;
(b) Gold reserves held by the South African Reserve Bank, and investment;
(c) Income, profit and investment;
(d) Wealth, assets and liabilities.
Q.1.4 Which of the following statements is INCORRECT? (2)
(a) M1 consists of coins, notes and demand deposits only;
(b) M3 includes short term deposits;
(c) M3 includes long term deposits;
(d) M3 = M1 + M2 + long term deposits.

Q.1.5
Which one of the following statements regarding fiscal policy and the budget is (2) correct?
(a) When the government plans to stimulate economic activity, it can increase
spending or reduce taxes;
(b) Revenue from tax is always greater than government spending in South
Africa;
(c) Demand management only refers to fiscal policy;
(d) A contractionary fiscal policy should be implemented to combat
unemployment.

Which of the following represents stock variables? (2)
(a) Wealth, saving and unemployment;
(b) Gold reserves held by the South African Reserve Bank, and investment;
(c) Income, profit and investment;
(d) Wealth, assets and liabilities

Taxes are a leakage or withdrawal from the flow of income and spending in
the economy;

In the circular flow of income and spending, financial institutions …
[1] act as an intermediary between those who have surplus funds and those who have
deficit funds.
[2] are not always useful, as households generally spend all their available funds.
[3] create an injection into the flow by collecting savings from participants with surplus
units only; therefore, there is no need to provide funds to deficit units.
[4] generally exist to collect investment spending and transform it into savings.

how can government spending be financed?

government spending has increased significantly over the past few decades. Explain any two reasons for this trend