EECF1624

UNIVERSITY OF THE FREE STATE

DEPARTMENT OF ECONOMICS

SEMESTER TEST 1

MEMORANDUM

DURATION: 1 HOUR MARKS: 50

QUESTION 1 [7 x2 = 14 MARKS] 1.1 B�������� 1.2 A�������� 1.3 D�������� 1.4 A�������� 1.5 B�������� 1.6 D�������� 1.7 B�������� (14)

QUESTION 2 [15 MARKS]

2.1.1 Year 2/ Jaar 2���� (1)

2.1.2 Nominal GDP is GDP at current prices and Real GDP is GDP at constant prices/ Nominale BBP is BBP teen huidige pryse en Reële BBP is BBP teen konstante pryse�������� (2)

2.1.3 (a) = 114/ 0.79 = 144, 30��������

(b) = 31/ 24 x 100 = 129.17 ��������

(c) = 434/ 1.29 = 336.43�������� (6)

2.1.4 Economic growth rate = Real GDP current- Real GDP base/ Real GDP base x 100����

= 336.43 – 216/ 216 x 100

= 55.76%�������� (3)

2.2.1 SA’s GDP or USA GNP / SA se BBP of VSA se BNP����

2.2.2 SA’s GNP or USA GDP /SA se BNP of VSA se BBP����

2.2.3 Germany’s GDP or Austrian GNP /Duitsland se BBP���� (3)

QUESTION 3 [11 MARKS]

3.1.1 C = 1820 + 0.95Y or C=1725+0.855Y ie. After tax adjustment �������� (2)

3.1.2 TE = C + I + G + X – M

= 1820 + 0.95(1-0.1)(Y-100) + 1670 + 1430 + 1550 – (1230 + 0.05Y)

= 1820 + 0.855(Y-100) + 1670 + 1430 + 1550 – (1230 + 0.05Y)

= 1820- 85.5 + 0.855Y + 1670 + 1430 + 1550 – (1230 + 0.05Y)

= 5154.50 + 0.805Y

= 5154.50 + 0.81Y�������� (6)

TE = Y

Y = 5154.50 + 0.81Y

0.19Y = 5154.50

Ye = R27128.95��������

��������

TE = Y

TE = 5154 + 0.81Y

TE = Y

TE = Y

5154.50

27128.95

3.1.3 Exp mult = 1/ 1 – mpc

= 1/ 1- 0.81

= 5.26����

Change in equilibrium income = Change in I x multiplier

= (100) x 5.26

= R526.32���� – GDP will decrease���� by this amount/ BBP sal daal met hierdie bedrag (3)

QUESTION 4 [10 MARKS]

4.1.1 Increase taxes/ Laat belasting styg OR Decrease govt spending/ Daling in regeringsbesteding���� (1)

4.1.2

������������ (3)

AS

AD0

AD1

CPI

GDP

4.1.3

������������ (3)

4.1.4 In 4.1.3���� - The result was a decrease in both CPI and GDP/output. ���� (2)

In 4.1.3- Dit het ‘n daling in beide VPI en BBP/uitset veroorsaak.

CPI

AS

AD0 AD1

GDP