EECF62406

UNIVERSITY OF THE FREE STATE

DEPARTMENT OF ECONOMICS
SEMESTER TEST 1
DATE: 9 SEPTEMBER 2014
LECTURERS: MS. C. CAMPHER/MR. C. MUDZINGIRI
MODERATOR: DR. N. KEYSER
DURATION: 1 HOUR

MARKS: 50

Instructions:
This paper consists of 3 questions on 4 pages.
Answer all the questions.
Read the questions carefully and please write legibly.
Show all calculations where necessary.
QUESTION 1
[7x2 = 14 marks]
Answer Question 1 in your answer book. Write the letter of your choice next to the
question number (e.g. 1.1 A or 1.1 B).
1.1 In the four-sector circular flow model, households will use their incomes to do all of the
following except:
A. saving.
B. paying taxes.
C. investing.
D. buying imported goods and services.
1.2 If the CPI was 132.5 at the end of 2006 and 140.2 at the end of 2007, the inflation rate
during 2007 was:
A. 5.8%
B. 5.4%
C. 7.7%
D. 4.4%
1.3 For an economy at full employment, an increase in the price of oil shifts the:
A. short-run aggregate supply curve to the left, raising the price level and decreasing
potential real GDP
B. short-run aggregate supply curve to the right, raising the price level and decreasing
actual real GDP so it is less than potential real GDP
C. short-run aggregate supply curve to the left, raising the price level and decreasing
actual real GDP so it is less than potential real GDP

D. long-run aggregate supply curve to the left, decreasing actual real GDP and increasing
potential real GDP
1.4 If C = 40 + 0.8Y; I = 60 2i; and interest rates(i) = 5. The value of the equilibrium
income assuming a private, closed economy is:
A. 200
B. 550
C. 450
D. 500
1.5 Suppose that the unemployment rate is 15%. Four million people fall into the frictional
unemployment category, 16 million are classified as structurally unemployed and the
economy is operating at full employment. Assume that there are no discouraged workers.
Then the total number of employed people in this economy is approximately:
A. 20 million.
B. 113 million
C. 12 million
D. 134 million.
1.6 Graphically, demand-pull inflation is shown as a:
A. rightward shift of the AD curve in the horizontal range of the AS curve.
B. rightward shift of the AS curve in the intermediate range of the AD curve.
C. leftward shift of the AS curve in the intermediate range of the AD curve.
D. rightward shift of the AD curve in the intermediate or vertical range of the AS curve.
1.7 Answer the next question on the basis of the following information for a private, closed
economy, where I= Investment, S is saving, and Y is gross domestic product (GDP)
I = 80; S = -80 + 0.4Y
The equilibrium GDP(Y) will be:
A. R160
B. R400
C. R360
D. R480

QUESTION 2

[24 marks]

2.1 In reality, the South African economy can either be on the Keynesian or intermediate or
classical range of the aggregate supply curve. Explain briefly, with the aid of 3 separate
graphs, what will be the effect of an increase in spending on social grants by the
government of South Africa on the price level and output levels in each of the three
cases? Clearly indicate in each graph which phase of the aggregate supply curve you are
using.[12]
2.2 Make use of the following information to answer the questions below:
C= 200 + 0.72Yd
M = 100 + 0.2Y

I = 900
G = 700

X = 200

2.2.1 Briefly explain what exactly the 200 and 0.72 in the consumption function mean. [2]
2.2.2 Calculate the value of the expenditure multiplier.
[2]
2.2.3 Calculate the value of equilibrium income.
[2]
2.2.4 Assume the value of the marginal propensity to import decreases to 0.11. How will
this change influence the slope of the total spending function?
[1]
2.3 Consider the following information of the economy of Horizon Deep and answer the
questions that follow:
Autonomous consumption = 2000
Marginal Propensity to Consume = 0.6
Investment Expenditure = 750
Exports = 2000
Imports = 1200+ 0.1Y
Autonomous tax=200
Tax rate= 0.2
Government Expenditure = 800
2.3.1
2.3.2

Write down the Total Expenditure function for this economy and illustrate this
graphically.
[6]
Determine the level of income where exports will be equal to the imports for this
economy.
[2]

QUESTION 3

[12 marks]

3.1 The table below shows information on the South African economy. Use the information
in the table to answer questions 3.1.1 and 3.1.2
Year
2009
2010
2011
3.1.1
3.1.2

Nominal GDP
(R billions)
2,406
(ii)
2,917

Real GDP
(R billions)
(i)
3,014
3,150

Calculate the missing values; (i), (ii) and (iii)

Calculate the inflation rate in 2010?

CPI
84.6
88.2
(iii)
[5]
[2]
3

3.2 Name any two problems associated with measuring Gross Domestic Product.
[2]
3.3 Economists in South Africa suggest that the rise in the July 2014 inflation to 6.6% is
mainly driven by the increase in the price of fuel. What type of inflation is caused by an
increase in the fuel price?
[1]
3.4 Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1
million of them become discouraged over their job prospects and cease to look for work.
What will happen to the official unemployment rate as a result of this? Explain briefly.
[2]

TOTAL = 50

EECF62406
UNIVERSITEIT VAN DIE VRYSTAAT
DEPARTEMENT EKONOMIE
SEMESTER TOETS 1
DATUM: 9 SEPTEMBER 2014
DOSENTE: MS. C. CAMPHER/MR. C. MUDZINGIRI
MODERATOR: DR. N. KEYSER
TYD: 1 UUR

PUNTE: 50

Instruksies:
Die toets bestaan uit 3 vrae op 4 bladsye.
Beantwoord al die vrae.
Lees die vrae noukeurig en skryf asseblief netjies.
Toon al berekeninge aan waar nodig.
VRAAG 1
[7x2 = 14 punte]
Beantwoord Vraag 1 in u antwoordboek. Skryf die letter van u keuse langs die
vraagnommer (bv. 1.1 A of 1.1 B).
1.8 In die vier-sektor kringloopmodel, sal huishoudings hulle inkomste gebruik vir al die
volgende behalwe vir:
E. spare.
F. belasting betalings.
G. investering.
H. koop van ingevoerde goedere en dienste.
1.9 Indien die VPI 132,5 was aan die einde van 2006 en 140,2 aan die einde van 2007, was
die inflasiekoers gedurende 2007:
A. 5.8%
B. 5.4%
C. 7.7%
D. 4.4%
1.10

Vir 'n ekonomie by volle indiensname, sal 'n toename in die prys van olie die:
A. korttermyn AS kurwe na links skuif, en n verhoging van die prysvlak en daling in
potensile rele BBP veroorsaak.
B. korttermyn AS kurwe na regs skuif, en n verhoging van die prysvlak en daling in
werklike rele BBP veroorsaak sodat dit minder is as potensile rele BBP.
C. korttermyn AS kurwe na links skuif, en n verhoging van die prysvlak en daling in
werklike rele BBP veroorsaak sodat dit minder is as potensile rele BBP.

D. langtermyn AS kurwe na links skuif, en n vermindering van die werklike rele BBP
en toename in die potensiaal rele BBP veroorsaak.
1.4 Indien C = 40 + 0.8Y; I = 60 2i; en rentekoerse (i) = 5. Veronderstel n private, geslote
ekonomie, is die waarde van die ewewigsinkomste:
E. 200
F. 550
G. 450
H. 500
1.5 Veronderstel die werkloosheidskoers is 15%. Vier miljoen mense is deel van die
wrywingswerkloosheid kategorie, 16 miljoen is geklassifisieer as struktureel
werkloos en die ekonomie is by volle indiensnamevlak. Veronderstel daar is geen
ontmoedigde werkers nie. Die totale hoeveelheid mense indiensgeneem in hierdie
ekonomie is ongeveer:
E. 20 miljoen.
F. 113 miljoen
G. 12 miljoen
H. 134 miljoen.
1.6 Grafies word vraag-trek inflasie geillustreer as n:
A. regswaartse skuif van die AD kurwe in die horisontale area van die AS kurwe.
B. regwaartse skuif van die AS kurwe in die middelste area van die AD kurwe.
C. linkswaartse skuif van die AS kurwe in die middelste area van die AD kurwe.
D. regwaartse skuif van die AD kurwe in die middelste of vertikale area van die AS
kurwe.
1.7 Beantwoord die volgende vraag op grond van die gegewe inligting vir n private, geslote
ekonomie, waar I = Investering, S spare, en Y bruto binnelandse produk (BBP) is.
I = 80; S = -80 + 0.4Y
Die ewewigs BBP(Y) is:
E. R160
F. R400
G. R360
H. R480

VRAAG 2

[24 punte]

2.1 In werklikheid, kan die Suid-Afrikaanse ekonomie f op die Keynesiaanse of

intermedire of klassieke reeks van die totale aanbodkurwe l. Verduidelik kortliks, met
die hulp van 3 afsonderlike grafieke, wat die effek van 'n toename in besteding aan
maatskapliketoelaes deur die regering van Suid-Afrika op die prysvlak en uitsetvlakke in
elk van die drie gevalle sal wees. Dui duidelik in elke grafiek watter fase van die totale
aanbodkurwe jy gebruik.
[12]
2.2 Maak gebruik van die volgende inligting om die vrae wat volg te beantwoord:
C= 200 + 0.72Yd
I = 900
X = 200
M = 100 + 0.2Y
G = 700
2.2.1 Verduidelik kortliks wat presies die 200 en die 0.72 in die verbruikersfunksie beteken.
[2]
2.2.2 Bereken die waarde van die bestedigingsvermenigvuldiger.
[2]
2.2.3 Bereken die waarde van die ewewigsinkomste.
[2]
2.2.4 Veronderstel die waarde van die marginale geneigheid om in te voer daal na 0.11. Hoe
sal hierdie verandering die helling van die totale bestedegingsfunksie beinvloed? [1]
2.3 Oorweeg die volgende inligting oor die ekonomie van Horizon Deep en antwoord die
vrae wat volg:
Outonome verbruiksbesteding = 2000
Marginale geneigheid om te verbruik = 0.6
Investering = 750
Uitvoere = 2000
Invoere = 1200+ 0.1Y
Outonome belasting = 200
Belastingkoers = 0.2
Regeringsbesteding = 800
2.3.1 Skryf neer die Totale bestedigingsfunskie (TE) vir hierdie ekonomie en illustreer dit
grafies.
[6]
2.3.2 Bepaal die waarde van inkomste waar uitvoere gelyk sal wees aan invoere vir hierdie
ekonomie.
[2]
VRAAG

[12 punte]

3.1 Die tabel hieronder toon inligting oor die Suid Afrikaanse ekonomie. Maak gebruik van
die inligting in die tabel om vrae 3.1.1 en 3.1.2 te beantwoord.
Jaar
2009
2010
2011

Nominale BBP (R Rele BBP

billions)
(R billions)
2,406
(i)
3,014
(ii)
2,917
3,150

VPI
84.6
88.2
(iii)

3.3.1
3.3.2

Bereken die ontbreekte waardes; (i), (ii) en (iii)

Bereken die inflasiekoers vir 2010?

[5]
[1]

3.4 Noem enige TWEE probleme wat verband hou met die meting van die Bruto Binnelandse
Produk.
[2]
3.5 Ekonome in Suid-Afrika dui daarop dat die styging in die Julie 2014 inflasie na 6,6% is
hoofsaaklik gedryf deur die toename in die prys van brandstof. Watter tipe inflasie is
veroorsaak deur 'n toename in die brandstofprys?
[1]
3.6 Veronderstel daar is 5 miljoen werkloses wat werk soek. Na verloop van tyd word 1
miljoen van hulle mismoedig oor hul werksvooruitsigte en hou op om werk te soek. Wat
sal met die amptelike werkloosheidskoers gebeur as gevolg hiervan? Verduidelik kortliks
[2]

TOTAAL = 50