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2. If saving dropped sharply in the economy, what would likely happen to investment? Why?
3. Suppose local governments throughout the United States increase their tax on business inventories. What would you expect to happen to U.S. investment? Why?
4. Suppose the government announces it will pay for half of any new investment undertaken by firms. How will this affect the investment demand curve?
• define fiscal policy
• mention the instruments of fiscal policy
• explain the difference between M1, M2 and M3
• differentiate between money, income and wealth
• explain why credit cards are not seen as money
• explain the basic function of a financial intermediary
• explain a demand determined money supply
• define the demand for money
• mention the motives for holding money and the main determinant of each
• define monetary policy
• list the market-oriented monetary policy instruments
• list the non-market-oriented monetary policy instruments
• define the repo rate
• list the functions of money
• define money
• list the properties of money
• list the functions of the SARB
• distinguish between a flow and a stock
• identify the two basic sets of markets in the economy
• identify the various economic participants/list
• the components of total spending
• identify the various injections into and
• leakages from the circular flow of income and spending
Name the three possible leakages out of the circular flow of income and spending in an economy.
Define the following concepts: 5.1. Flow variable 5.2. Stock variable 5.3. Household 5.4. Firm 5.5. Transfer payments 5.6. Balance of payments
An increase of exports from South Africa to other countries will … . [1] increase the income of South African producers and increase aggregate spending on South African goods [2] increase the income of South African producers and decrease aggregate spending on South African goods [3] decrease the income of South African producers and decrease the aggregate spending on South African goods [4] decrease the income of South African producers and increase the aggregate spending on South African goods
The act of purchasing capital goods is called … . [1] consuming [2] making a profit [3] capital formation [4] producing
