ECS2602 ASSIGNMENT 1 SEMESTER 1 2025 – FULLY ANSWERED

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ECS2602 Assignment 1 Semester 1 | Due 30 March 2025. All questions answered. Assessment 1 is based on learning units 1, 2 and 3 (60 marks) Question 1: According to the video, fiscal policy is the use of __________________________________and ____________________________ to influence the economy. (2) Question 2: Fiscal policy is a powerful tool. The key to its power is the ___________________________. (1) Question 3: In the video, there is a reference to supply-side economists, like __________________________. (1) Question 4: Monetary policy is the way _____________________________ influences the economy through the management of the ___________________________ and ____________________________. (3) Question 5: The central bank system in the United States is called the _____________________________. (1) Work through LU 1 of the study guide and answer questions 6 to 11. (10 marks) Question 6: In the video the more traditional financial market is explained where it is assumed that the central bank is in control of the money supply, in other words, the exogenously determined money approach. In our particular financial market in ECS2602 module, we follow the endogenously determined money approach where expansionary monetary policy in South Africa entails a(n) ____________________ in the interest (repo) rate in order to __________________ the demand for goods in the economy and or a(n) ________________________ in the level of output and income. (3) Question 7: Which one of the following statements is not a macroeconomic issue? A. The unemployment rate in South Africa, according to the strict definition, was 28.18% in 2019. B. The drought experienced in 2018/19 reduced many crop harvests and caused food price inflation in South Africa. C. Because of high inflation, it is expected that the interest rate will increase. D. The drought experienced in 2018/19 reduced the total maise crop harvested and caused the price of maise in South Africa to rise. Statement: ________________ (1) Question 8: Which one of the following statements is INCORRECT? A. The main fiscal policy instrument is the budget, while the main policy variables are government spending and taxation. B. Assuming a balanced budget initially, the result of the implementation of expansionary fiscal policy is a budget deficit. C. An expansionary monetary policy entails a decrease in the interest rate to increase the demand for goods in the economy. D. A contractionary monetary policy entails an increase in the interest rate. Therefore, the cost of credit in the economy decreases, and the demand for goods decreases. Statement: ________________ (1) Question 9: A decrease in taxes implies the implementation of __________ A. expansionary fiscal policy. B. contractionary fiscal policy. C. expansionary monetary policy. D. contractionary monetary policy. Option ___________________ (1) Question 10: A farmer from Limpopo (South Africa) buys his neighbour’s tractor, this does not form part of the gross domestic product (GDP) since _______________________________________________________ ________________________________________________________________________________ _____________________________________________________________________________.(2) Question 11: Imports of agricultural products from Britain to South Africa do not form part of the gross domestic product (GDP) since _________________________________________________________________ __________________________________________________________________________________ ______________________________________________________________________________.(2) Question 12: According to Ms Esterhuyse, which two markets are coming together in Learning Unit 4? _____________________________________ and ___________________________________. (2) Question 13: Use symbols when answering the following question. The autonomous spending components are _______________________, ___________________________, _________________________ and ______________________, while induced spending is represented by _____________________. (5) Question 14: In the