EECF1624

UNIVERSITY OF THE FREE STATE

DEPARTMENT OF ECONOMICS
SEMESTER TEST 1
MEMORANDUM
DURATION: 1 HOUR

MARKS: 50

QUESTION 1
1.1 B
1.2 A
1.3 D
1.4 A
1.5 B
1.6 D
1.7 B

[7 x2 = 14 MARKS]

QUESTION 2

[15 MARKS]

(14)

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 Rele 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%

2.2.1 SAs GDP or USA GNP / SA se BBP of VSA se BNP

(3)

2.2.2 SAs GNP or USA GDP /SA se BNP of VSA se BBP

(3)

2.2.3 Germanys GDP or Austrian GNP /Duitsland se BBP

QUESTION 3

[11 MARKS]

3.1.1 C = 1820 + 0.95Y or C=1725+0.855Y ie. After tax adjustment

3.1.2

(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 = Y

TE = 5154 + 0.81Y

5154.50

TE = Y
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

met hierdie bedrag

by this amount/ BBP sal daal

(3)

QUESTION 4

[10 MARKS]

4.1.1 Increase taxes/ Laat belasting styg OR Decrease govt spending/ Daling in
regeringsbesteding

(1)

4.1.2
CPI

AS

AD0

AD1

GDP

(3)

4.1.3
AS
CPI

AD1

AD0

GDP

(3)
4.1.4

In 4.1.3

- The result was a decrease in both CPI and GDP/output.

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

(2)