,ECS1601 Assignment 4 (COMPLETE ANSWERS)
2025 - DUE 15 September 2025; 100% TRUSTED
Complete, trusted solutions and explanations.
Multiple choice assured excellence
Question 1 — [7 Marks] (≈100 words)
Two interventions to support economic resilience in Mitchells
Plain:
1. Local SMME & informal-sector support — provide
microcredit, streamlined licensing, business-development
services and linkages to municipal procurement. This raises
injections into the circular flow (higher investment and
government purchases), increases household incomes and
employment, and strengthens the local multiplier so
spending recirculates inside the township rather than
leaking out.
2. Skills + local productive capacity investment — fund
vocational training, digital hubs and small-scale green
infrastructure (solar, repairs). This raises productive
capacity (rightward SRAS shift), reduces reliance on
imports, and—combined with demand support—boosts
real GDP and lowers unemployment while reducing price
volatility.
(Both interventions reduce leakages and strengthen the
circular-flow multiplier.)
, Question 2 — [18 Marks] (≈450 words total for 2.1–2.3)
Sources used: Executive Order / White House fact sheet and
Annex (reciprocal tariffs, South Africa 30%) and related
reporting about the April 2025 reciprocal tariffs; Dr David I.
Ramadan X post. The White House+2The White House+2
2.1 [8 Marks] — Why the tariffs are not good for SA/Lesotho
(AD–AS explanation)
The Trump reciprocal tariffs reduce foreign demand for goods
exported to the U.S. from affected countries. For South
Africa/Lesotho this lowers Net Exports (NX) → a negative
autonomous shock to aggregate demand (AD). In the AD–AS
diagram, AD shifts left from AD₀ to AD₁. Short-run
consequences: equilibrium real GDP falls (Y↓), the price level
falls (P↓) or growth decelerates, and unemployment rises as
firms cut production. If exported intermediate inputs fall,
domestic producers may face supply disruptions that can also
shift short-run aggregate supply (SRAS) leftward in specific
sectors (raising costs), but the dominant effect from lost export
demand is lower AD and lower national income. Lower incomes
feed back into weaker consumption and investment (multiplier
contraction), so the initial export shock is amplified and growth
slows. (Illustration: label initial equilibrium at Y₀,P₀; shift AD left
to new intersection Y₁,P₁; show lower Y and P.)
2025 - DUE 15 September 2025; 100% TRUSTED
Complete, trusted solutions and explanations.
Multiple choice assured excellence
Question 1 — [7 Marks] (≈100 words)
Two interventions to support economic resilience in Mitchells
Plain:
1. Local SMME & informal-sector support — provide
microcredit, streamlined licensing, business-development
services and linkages to municipal procurement. This raises
injections into the circular flow (higher investment and
government purchases), increases household incomes and
employment, and strengthens the local multiplier so
spending recirculates inside the township rather than
leaking out.
2. Skills + local productive capacity investment — fund
vocational training, digital hubs and small-scale green
infrastructure (solar, repairs). This raises productive
capacity (rightward SRAS shift), reduces reliance on
imports, and—combined with demand support—boosts
real GDP and lowers unemployment while reducing price
volatility.
(Both interventions reduce leakages and strengthen the
circular-flow multiplier.)
, Question 2 — [18 Marks] (≈450 words total for 2.1–2.3)
Sources used: Executive Order / White House fact sheet and
Annex (reciprocal tariffs, South Africa 30%) and related
reporting about the April 2025 reciprocal tariffs; Dr David I.
Ramadan X post. The White House+2The White House+2
2.1 [8 Marks] — Why the tariffs are not good for SA/Lesotho
(AD–AS explanation)
The Trump reciprocal tariffs reduce foreign demand for goods
exported to the U.S. from affected countries. For South
Africa/Lesotho this lowers Net Exports (NX) → a negative
autonomous shock to aggregate demand (AD). In the AD–AS
diagram, AD shifts left from AD₀ to AD₁. Short-run
consequences: equilibrium real GDP falls (Y↓), the price level
falls (P↓) or growth decelerates, and unemployment rises as
firms cut production. If exported intermediate inputs fall,
domestic producers may face supply disruptions that can also
shift short-run aggregate supply (SRAS) leftward in specific
sectors (raising costs), but the dominant effect from lost export
demand is lower AD and lower national income. Lower incomes
feed back into weaker consumption and investment (multiplier
contraction), so the initial export shock is amplified and growth
slows. (Illustration: label initial equilibrium at Y₀,P₀; shift AD left
to new intersection Y₁,P₁; show lower Y and P.)
