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During this COVID-19 pandemic, the South African reserve bank(SARB) plays a crucial role in maintaining financial stability.
Describe the roles that the SARB can play to ensure the objective of financial stability is met.
Government spending (as a percentage of gross domestic expenditure) has
increased significantly over the past decades. Explain any two reasons for this
trend.

Question 5               (Marks: 10)

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).

(Note: 3 marks for the graph and 7 marks for the explanation)


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).
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

Explain, with the aid of a graph, the impact of a cut in the interest rate on the

demand for money.


South Africa, March 18 ‐
Repurchase rate: 6.25%
Inflation rate: 4.5% (January)

Based on the projections of the repurchase rate in the extract above.

Explain, with the aid of a graph, the impact of a cut in the interest rate on the
demand for money.
Government spending (as a percentage of gross domestic expenditure) has
increased significantly over the past decades. Explain any two reasons for this
trend
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.
Which one of the following statements is incorrect?
[1] The opportunity cost of holding money balances is the interest that could have been earned if the money had been used to purchase interest-bearing assets instead.
[2] The quantity of money demanded for transaction purposes depends on the interest rate.
[3] The demand for money as an asset is also called the speculative demand for money.
[4] The quantity of money demanded for speculative purposes is negatively related to the interest rate.
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