Other Economics Answers

The Aggregate Demand- Aggregate Supply (AD-AS) model can be used to illustrate the right combination of policies in an economy. Discuss four supply-side measures that policy makers can be implemented to expand the economy and explain why supply-side measures are more desirable than demand-side measures?

A clear understanding of the macroeconomic environment is important to inform your business decisions. Using relevant examples of businesses, discuss how fluctuations of the following macroeconomic indicators may affect the business. (In your answer, discuss the effect of both increasing (5 marks) and decreasing (5marks) trends on the business).

Your answer must start by explaining the nature of business or sector of the company/organisation, followed by a critical review of the variables.

a. Fluctuations of the GDP [10 Marks]

b. Fluctuations of the interest rate [10 Marks]

c. Fluctuations of the exchange rate [10 Marks]

(a) Market systems may not allocate resources efficiently for many reasons. Governments intervene in order to correct such market failures. Imposition of price controls is one of such interventions. Using relevant diagrams, discuss the use of (i) maximum prices, and (ii) minimum price controls in the markets and the consequences of each approach to the market and the society.

As a Production Manager of a manufacturing firm that produces both an elastic good and an inelastic good, illustrate to a new board of the organisation the relationship between price elasticity of demand and total revenue, and how the elasticity concept can be used to maximise revenues of both commodities? Illustrate your answer using relevant diagrams of elastic and inelastic goods.

The supply function of a good is given by Ps=Q2-2Q+12. Determine the producer surplus if ten units are supplied (Q=10)at price P.

'FINANCIAL ACCOUNTING 2'

‘The idea that stock should be included in accounts at the lower of historical cost and net realisable value follows the prudence convention but not the consistency convention.’ Required:

(a) Do you agree with the quotation?

(b) Explain, with reasons, whether you think this idea (that stocks should be included in accounts at the lower of historical cost and net realisable value) is a useful one. Refer to at least two classes of user of financial accounting reports in your answer.

 Which one of the following is correct about government spending in the Keynesian model?

[1] Government spending affect the size of the multiplier.

[2] Government spending decreases aggregate spending in the economy.

[3] A decrease in repo rate discourage social spending by government.

[4] Government spending has an effect on the income level in the economy.

Use the information below to answer questions 3.8 to 3.10.

If 𝐶̅= R25 billion, I = R35 billion and c = 0.80 

3.8 The marginal propensity to save is …

[1] 0.80

[2] 1

[3] 1.20

[4] 0.20

3.9 The value of the multiplier is …

[1] 5

[2] 0.20

[3] 1

[4] 2

3.10 The equilibrium level of income is …

[1] 60

[2] 120

[3] 300

[4] 90

Which of the following is not one of the factors that determines the firm’s decision to invest?

[1] consumption expenditure 

[2] expected return 

[3] cost of capital 

[4] interest rate