ECS1601 Alternative Assignment 04
Student number: ……….
Name(s) and Surname: ………
Date submitted: ………
Total word count: ………
Question 1 [Word count = 99]
To get a town like Alice growing, we need to find ways to put more money into the local
circular flow of income and keep it there. One of the most e ective ways is for the
government to invest in solid public infrastructure. Imagine if the roads to the farms were
properly tarred, the water supply was reliable, and fast internet was available. This would
immediately create jobs for local construction workers and engineers, putting wages in
their pockets. But more than that, it makes the entire town a more attractive place for other
businesses to set up shop, as their costs of operation would fall.
Another powerful intervention would be to boost local agriculture and agro-processing.
By providing small-scale farmers with better training, grants, and help to access bigger
markets, we empower them to produce more and sell more. When a local farmer
succeeds, the money they make is far more likely to be spent at the local spaza shop,
mechanic, or clinic. This creates a positive cycle—what we call the multiplier e ect—
where money circulates within the community, stimulating more economic activity and
fostering real, home-grown growth.
Question 2 [Word count = 449]
Question 2.1.
From where we stand in South Africa, these proposed US tari s are a major blow to our
economic growth. Think of our economy using the AS-AD model: this tari is a direct attack
on our aggregate demand. Our cars suddenly become 30% more expensive for Americans,
so they'll naturally buy fewer of them. This massive drop in our exports means the overall
demand for goods made in South Africa plummets, shifting our AD curve to the left.
The result? Our economy shrinks. We see a lower GDP and people start losing their jobs—
exactly as the article warns, with predictions of 30,000 job losses. It’s not just the big car
plants in East London that su er; the entire network of suppliers and service providers
feels the pain. In the long run, this could even scare o future investment, damaging
, our aggregate supply as well. So, this isn't just a short-term shock; it threatens to stunt our
growth trajectory for years to come.
Question 2.2.
You might think these tari s are good for America, but for a US consumer, they're a bad
deal. The goal might be to protect US carmakers, but the immediate e ect is that popular
cars like BMWs and Mercedes-Benzes become a lot more expensive. Using the AS-AD
model, this acts like a cost shock, shifting the short-run aggregate supply curve to the left.
What does that mean for the average American looking to buy a car? They face two
problems: higher prices and fewer choices. The showroom suddenly has fewer options,
and the ones that are there cost more. This e ectively reduces their purchasing power. So,
while the policy is dressed up as protection for local industry, it ends up acting as a hidden
tax on US consumers, leaving them with less money in their pockets for other things.
Question 2.3.
The SARB's main job is to keep inflation in check. However, a huge shock like these US
tari s risks doing the opposite—it could cause a slowdown so severe that we start flirting
with deflation (a general fall in prices). To prevent this and give the economy a bit of a
boost, the SARB would likely cut the repo rate. Making it cheaper for banks to borrow
money from the Reserve Bank means they can, in turn, o er lower interest rates on loans
and mortgages. This encourages businesses to borrow and invest in keeping their
operations going, and it helps households a ord their car and house payments. This extra
spending helps to boost overall demand in the economy, softening the blow from the drop
in exports.
Question 3 [Word count = 199]
Question 3.1.
In simple terms, the o icial unemployment rate is the percentage of people in our country
who are part of the labour force—meaning they are of working age, and either have a job or
are actively looking for one—but who currently don't have a job. "Actively looking" means
they've done something concrete to find work, like applying for a job, in the last four weeks.
Question 3.2.
This jump in the unemployment rate is a major setback for the government's key goals.
First, it directly undermines sustainable economic growth. When such a large portion of
our people who want to work can't find jobs, it means we're not using our most valuable
Student number: ……….
Name(s) and Surname: ………
Date submitted: ………
Total word count: ………
Question 1 [Word count = 99]
To get a town like Alice growing, we need to find ways to put more money into the local
circular flow of income and keep it there. One of the most e ective ways is for the
government to invest in solid public infrastructure. Imagine if the roads to the farms were
properly tarred, the water supply was reliable, and fast internet was available. This would
immediately create jobs for local construction workers and engineers, putting wages in
their pockets. But more than that, it makes the entire town a more attractive place for other
businesses to set up shop, as their costs of operation would fall.
Another powerful intervention would be to boost local agriculture and agro-processing.
By providing small-scale farmers with better training, grants, and help to access bigger
markets, we empower them to produce more and sell more. When a local farmer
succeeds, the money they make is far more likely to be spent at the local spaza shop,
mechanic, or clinic. This creates a positive cycle—what we call the multiplier e ect—
where money circulates within the community, stimulating more economic activity and
fostering real, home-grown growth.
Question 2 [Word count = 449]
Question 2.1.
From where we stand in South Africa, these proposed US tari s are a major blow to our
economic growth. Think of our economy using the AS-AD model: this tari is a direct attack
on our aggregate demand. Our cars suddenly become 30% more expensive for Americans,
so they'll naturally buy fewer of them. This massive drop in our exports means the overall
demand for goods made in South Africa plummets, shifting our AD curve to the left.
The result? Our economy shrinks. We see a lower GDP and people start losing their jobs—
exactly as the article warns, with predictions of 30,000 job losses. It’s not just the big car
plants in East London that su er; the entire network of suppliers and service providers
feels the pain. In the long run, this could even scare o future investment, damaging
, our aggregate supply as well. So, this isn't just a short-term shock; it threatens to stunt our
growth trajectory for years to come.
Question 2.2.
You might think these tari s are good for America, but for a US consumer, they're a bad
deal. The goal might be to protect US carmakers, but the immediate e ect is that popular
cars like BMWs and Mercedes-Benzes become a lot more expensive. Using the AS-AD
model, this acts like a cost shock, shifting the short-run aggregate supply curve to the left.
What does that mean for the average American looking to buy a car? They face two
problems: higher prices and fewer choices. The showroom suddenly has fewer options,
and the ones that are there cost more. This e ectively reduces their purchasing power. So,
while the policy is dressed up as protection for local industry, it ends up acting as a hidden
tax on US consumers, leaving them with less money in their pockets for other things.
Question 2.3.
The SARB's main job is to keep inflation in check. However, a huge shock like these US
tari s risks doing the opposite—it could cause a slowdown so severe that we start flirting
with deflation (a general fall in prices). To prevent this and give the economy a bit of a
boost, the SARB would likely cut the repo rate. Making it cheaper for banks to borrow
money from the Reserve Bank means they can, in turn, o er lower interest rates on loans
and mortgages. This encourages businesses to borrow and invest in keeping their
operations going, and it helps households a ord their car and house payments. This extra
spending helps to boost overall demand in the economy, softening the blow from the drop
in exports.
Question 3 [Word count = 199]
Question 3.1.
In simple terms, the o icial unemployment rate is the percentage of people in our country
who are part of the labour force—meaning they are of working age, and either have a job or
are actively looking for one—but who currently don't have a job. "Actively looking" means
they've done something concrete to find work, like applying for a job, in the last four weeks.
Question 3.2.
This jump in the unemployment rate is a major setback for the government's key goals.
First, it directly undermines sustainable economic growth. When such a large portion of
our people who want to work can't find jobs, it means we're not using our most valuable
