Macroeconomics Answers

Dr. Muchuu runs a sole firm in Zambia called Elena Enterprises such that he is the only supplier of infrared
thermometers. Kindly state the scientific name given to Dr. Muchuu and briefly describe the features of Elena
Enterprises. Graphically differentiate Elena Enterprises from a perfect competitive market.
(b) A certain region licensed only one firm to supply tap water within that region. Graphically illustrate why it
is more economical to have a sole water supplier in a particular region.

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

Describe three ways in which government spending can be financed.

Government spending (as a percentage of gross domestic expenditure) has
increased significantly over the past decades. Explain any two reasons for this
trend.
(6)

Which of the following are macroeconomic objectives?
a. unemployment, economic growth and inflation
b. external stability, full employment and economic growth
c. equitable distribution of income and price stability
[1] All the statements are correct.
[2] a and b
[3] b and c
[4] a and c
[5] None of the above statements

If the exchange rate changes from R9,60 = $1,00 to R8,50 = $1,00, then
[1] the rand has depreciated against the dollar.
[2] the rand has weakened against the dollar.
[3] the rand has appreciated against the dollar.
[4] none of the above.

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

A tax is
[1] regressive when everybody pays the same amount of tax.
[2] regressive when all taxpayers pay the same rate.
[3] proportional when everybody pays the same amount of tax.
[4] proportional when tax is levied on goods and services at the same standard rate.

Which one of the following statements on monetary policy is incorrect?
[1] Monetary policy in South Africa is implemented by the South African Reserve Bank
(SARB).
[2] The key instrument of monetary policy is the repurchase rate (repo rate).
[3] The SARB’s main objective is to control the growth of the money stock.
[4] The SARB pursues a formal inflation target, set by the Minister of Finance, in
conjunction with the SARB.