ECS1601 – ASSESSMENT 2 – EXPECTED QUESTIONS AND ANSWERS - 2024
Assessment 2
Started on Friday, 8 September 2023,
State Finished
Completed on Friday, 8 September 2023,
Time taken
Marks 20.00/20.00
Grade 100.00 out of 100.00
Question 1
The financial account is a component of the balance of payments. Which of the
following transactions would be recorded in the account?
a.
sales of machinery from South Africa to China
b.
importing rubber from Thailand for the production of tyres in South Africa
c.
South Africans purchasing shares on the JSE
d.
American Corporations purchasing land and buildings in South Africa
Feedback
See Section 5.5 of the prescribed book.
The correct answer is: American Corporations purchasing land and buildings in
South Africa
Question 2
One of the following is an instrument of trade policy.
a.
foreign exchange reserves
b.
balance of payments
c.
1
, ECS1601 – ASSESSMENT 2 – EXPECTED QUESTIONS AND ANSWERS - 2024
import tariff
d.
currency depreciation
e.
gross domestic product
Feedback
An import tariff is a tax or duty levied on goods imported into the country. It is meant
to protect local industries from foreign competition by increasing the final cost of
imported goods, so that consumers support local businesses selling goods they
would otherwise buy from foreign countries.
The gross domestic product is the total value of all final goods produced within the
borders of a country, in a year. It is a measure of macroeconomic performance and
not a trade policy instrument.
A currency depreciation is when the price of foreign currency increases in terms of
domestic currency. For example, when the rand/dollar exchange rate increases from
R15,00/$ to R16,00/$. This is a movement in the price of currency in the foreign
exchange market and not a trade policy instrument. In addition to this, foreign
exchange reserves are recorded in the balance of payments and are not an
instrument of trade policy.
The correct answer is: import tariff
Question 3
Suppose that the price of Brent Crude oil rises, which is a critical import in
South Africa. At the same time, there is an increase in the number of American
tourists coming to South Africa. What would be the impact on the US
Dollar/Rand exchange rate?
a.
The Rand will appreciate against the Dollar and the quantity of Dollars will increase.
b.
The Rand will depreciate against the Dollar and the quantity of Dollars will decrease.
c.
The effect on the Rand is indeterminate and the quantity of Dollars will rise.
2
Assessment 2
Started on Friday, 8 September 2023,
State Finished
Completed on Friday, 8 September 2023,
Time taken
Marks 20.00/20.00
Grade 100.00 out of 100.00
Question 1
The financial account is a component of the balance of payments. Which of the
following transactions would be recorded in the account?
a.
sales of machinery from South Africa to China
b.
importing rubber from Thailand for the production of tyres in South Africa
c.
South Africans purchasing shares on the JSE
d.
American Corporations purchasing land and buildings in South Africa
Feedback
See Section 5.5 of the prescribed book.
The correct answer is: American Corporations purchasing land and buildings in
South Africa
Question 2
One of the following is an instrument of trade policy.
a.
foreign exchange reserves
b.
balance of payments
c.
1
, ECS1601 – ASSESSMENT 2 – EXPECTED QUESTIONS AND ANSWERS - 2024
import tariff
d.
currency depreciation
e.
gross domestic product
Feedback
An import tariff is a tax or duty levied on goods imported into the country. It is meant
to protect local industries from foreign competition by increasing the final cost of
imported goods, so that consumers support local businesses selling goods they
would otherwise buy from foreign countries.
The gross domestic product is the total value of all final goods produced within the
borders of a country, in a year. It is a measure of macroeconomic performance and
not a trade policy instrument.
A currency depreciation is when the price of foreign currency increases in terms of
domestic currency. For example, when the rand/dollar exchange rate increases from
R15,00/$ to R16,00/$. This is a movement in the price of currency in the foreign
exchange market and not a trade policy instrument. In addition to this, foreign
exchange reserves are recorded in the balance of payments and are not an
instrument of trade policy.
The correct answer is: import tariff
Question 3
Suppose that the price of Brent Crude oil rises, which is a critical import in
South Africa. At the same time, there is an increase in the number of American
tourists coming to South Africa. What would be the impact on the US
Dollar/Rand exchange rate?
a.
The Rand will appreciate against the Dollar and the quantity of Dollars will increase.
b.
The Rand will depreciate against the Dollar and the quantity of Dollars will decrease.
c.
The effect on the Rand is indeterminate and the quantity of Dollars will rise.
2
