ECS1601
Assignment 4
DUE 15 September 2025
, ASSIGNMENT 04 - COMPLETE SOLUTIONS
DUE DATE: 15 SEPTEMBER 2025
Total word count: 950
Question 1 [Word count = 100]
With reference to the Circular flow model as well as economic growth, two interventions
that would most effectively support economic resilience in Mitchells Plain are:
1. Investment in Local Infrastructure and Skills Development: Government
expenditure (G) injections into education, vocational training, and infrastructure would
increase the circular flow through the multiplier effect. This creates employment
opportunities, increases household income (Y), leading to higher consumption (C) and
savings (S), strengthening the local economic base.
2. Support for Small and Medium Enterprises (SMEs): Facilitating access to credit
and business development services increases investment (I) in the circular flow model.
This generates employment, stimulates local production, and reduces leakages through
imports by promoting local goods and services, thereby enhancing economic resilience
through diversified income sources.
Question 2 [Word count = 450]
2.1
The US tariffs on South Africa (30%) and Lesotho (50%) negatively impact economic
growth through the AD-AS model:
Aggregate Demand Effects: The tariffs reduce South African and Lesotho exports to
the US, directly decreasing net exports (NX = X - M). Since AD = C + I + G + NX, the
reduction in exports shifts the AD curve leftward from AD₁ to AD₂. This occurs because
Assignment 4
DUE 15 September 2025
, ASSIGNMENT 04 - COMPLETE SOLUTIONS
DUE DATE: 15 SEPTEMBER 2025
Total word count: 950
Question 1 [Word count = 100]
With reference to the Circular flow model as well as economic growth, two interventions
that would most effectively support economic resilience in Mitchells Plain are:
1. Investment in Local Infrastructure and Skills Development: Government
expenditure (G) injections into education, vocational training, and infrastructure would
increase the circular flow through the multiplier effect. This creates employment
opportunities, increases household income (Y), leading to higher consumption (C) and
savings (S), strengthening the local economic base.
2. Support for Small and Medium Enterprises (SMEs): Facilitating access to credit
and business development services increases investment (I) in the circular flow model.
This generates employment, stimulates local production, and reduces leakages through
imports by promoting local goods and services, thereby enhancing economic resilience
through diversified income sources.
Question 2 [Word count = 450]
2.1
The US tariffs on South Africa (30%) and Lesotho (50%) negatively impact economic
growth through the AD-AS model:
Aggregate Demand Effects: The tariffs reduce South African and Lesotho exports to
the US, directly decreasing net exports (NX = X - M). Since AD = C + I + G + NX, the
reduction in exports shifts the AD curve leftward from AD₁ to AD₂. This occurs because
