UNISA Exam Memo October/November 2011 ECS1601
SECTION A (50 MARKS)
QUESTION 1 (7 MARKS)
(i) (4marks)
the total value of all final goods and services produced within the boundaries
of a country in a particular year
Most important barometer of the performance of the economy.
Real GDP takes into account inflation, i.e. adjusted for changes in the price
level.
Nominal GDP is not adjusted for inflation
Nominal GDP and GDP at current prices are synonyms.
(ii) (3 marks)
Inflation is defined as a continuous and considerable rise in prices in general.
Divided into cost-push inflation and demand-pull inflation
Cost-push inflation is triggered by increases in the cost of production.
Increases in production costs push up the price level.
Demand-pull inflation occurs when the aggregate demand for goods and
services increases while the aggregate supply remains unchanged.
QUESTION 2 (15 MARKS)
(i) (3 marks)
1
, (ii) (3 marks)
D for $ will ( - shift to the left; $ depreciates; ZAR appreciates)
(iii) (9 marks)
Implement contractionary fiscal policy; (G and/or (T; Ad will decrease – shift to the
left; P( and Y(; lower inflation at the cost of production / Y / employment.
QUESTION 3 (11 MARKS)
(i) the multiplier (2 marks)
2
SECTION A (50 MARKS)
QUESTION 1 (7 MARKS)
(i) (4marks)
the total value of all final goods and services produced within the boundaries
of a country in a particular year
Most important barometer of the performance of the economy.
Real GDP takes into account inflation, i.e. adjusted for changes in the price
level.
Nominal GDP is not adjusted for inflation
Nominal GDP and GDP at current prices are synonyms.
(ii) (3 marks)
Inflation is defined as a continuous and considerable rise in prices in general.
Divided into cost-push inflation and demand-pull inflation
Cost-push inflation is triggered by increases in the cost of production.
Increases in production costs push up the price level.
Demand-pull inflation occurs when the aggregate demand for goods and
services increases while the aggregate supply remains unchanged.
QUESTION 2 (15 MARKS)
(i) (3 marks)
1
, (ii) (3 marks)
D for $ will ( - shift to the left; $ depreciates; ZAR appreciates)
(iii) (9 marks)
Implement contractionary fiscal policy; (G and/or (T; Ad will decrease – shift to the
left; P( and Y(; lower inflation at the cost of production / Y / employment.
QUESTION 3 (11 MARKS)
(i) the multiplier (2 marks)
2
