Macroeconomics Answers

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.

Which one of the following statements is FALSE? (2)
(a) There are four broad groups of decision‐making units in the economy:
households, firms, government and the foreign sector;
(b) Savings are an important injection into the circular flow of income and
spending in the economy;
(c) Taxes are a leakage or withdrawal from the flow of income and spending in
the economy;
(d) Spending by households on consumer goods and services is called
consumption spending.

In the circular flow of income and spending: (2)
(a) Investment results in a decrease in the volume of the income flow;
(b) Savings result in an increase in the volume of the income flow;
(c) Taxes result in an increase in the volume of the income flow;
(d) Imports result in a decrease in the volume of the income flow.

A) Which of the following is INCORRECT

1. M1 consist of coins, notes and demand deposits only;
2. M3 includes short term deposits ;
3. M3 includes long-term deposits ;
4. M3= M1 + M2+ long term deposits.

Describe three ways in which government spending can be financed.

Many economists argue that the South African government should implement a policy of privatisation. Argue in favour of a policy of privatisation. .

Explain in detail, with the aid of a graph, the two components of the demand for money. Identify the main determinant of each component. In your graph, illustrate each component as well as the total demand for money. (Hint: You do not have to draw separate graphs for each component. You can combine everything on one set of axes).

In the circular flow of income and spending:
(a) Investment results in a decrease in the volume of the income flow;
(b) Savings result in an increase in the volume of the income flow;
(c) Taxes result in an increase in the volume of the income flow;
(d) Imports result in a decrease in the volume of the income flow.

In the Circular Flow of Income:

a) investment results in a decrease in the volume of the income flow

b) Savings results in an increase in the volume of the income flow

c) Taxes result in an increase in the volume of the income flow

d) imports results in a decrease in the volume of the income flow

Choose the correct answer
The function of the South African Reserve Bank as bank supervisor entails …
[1] reducing interbank settlement risks by reducing the potential for settlement default by one or more banks.
[2] making, issuing and destroying banknotes and coins.
[3] achieving a sound, efficient banking system in the interest of depositors of banks and the economy as a whole.
[4] formulating an exchange rate policy.