Ecs1601 Assignment 2 semester 12023 1
Question 1
Correct
Mark 1.00 out of 1.00
South African firms purchase more US capital goods. The for dollars increases and rand against the dollar.
a. supply; depreciates
b. demand; depreciates
c. supply; appreciates
d. demand; appreciates
e. demand; decreases
Your answer is correct.
If South African purchases and thus imports more capital goods, like machinery etc., from the US, South African firms have to pay for the
imports in dollars. The demand for dollars on the South African foreign exchange market will increase, ceteris paribus, and therefore the
Rand will depreciate relative against to the dollar, ceteris paribus. Refer toSee pages 71 to 76, and Figure 4-3, and Tables 4-1 and 4-2 in the
prescribed textbook
Question 2
Correct
Mark 1.00 out of 1.00
Suppose that the price of Brent Crude oil, which is a South African import, falls and is denominated in US Dollars. What is the impact of the
price decrease on the foreign exchange market?
a. The supply of Dollars will increase and the Rand will appreciate.
b. The supply of Dollars will decrease and the Rand will depreciate.
c. The demand for Dollars will decrease and the Rand will appreciate.
d. The demand for Dollars will increase and the Rand will depreciate.
The decrease in the price of Brent Crude oil will decrease the demand for US Dollars, as this implies that less Rands will be needed to buy a
barrel of oil. Consequently, the decrease in the demand for Dollars will shift the demand curve to the left and the Rand will appreciate. See
Section 4.3 of the prescribed book.
, 2
uestion 3
Correct
Mark 1.00 out of 1.00
MENU
If two countries have differing opportunity costs of production for two goods, then
Dashboard / Courses / UNISA / 2023 / Semester 1 / ECS1601-23-S1 / Online assessments / Assessment 2
a. each country should specialise in the good for which it has a higher opportunity cost of production.
b. only the country with an absolute advantage in the production of both goods stands to gain from trade.
c. each country should purchase inputs from the other country in order to gain an absolute advantage.
d. each country should specialise in the production of the good for which it has a relative advantage.
e. each country should import all goods instead of producing them domestically.
Your answer is correct.
Absolute advantage is not a prerequisite for international trade. Trade can also be beneficial when one country is more efficient in the
production of both goods. According to the English economist, David Ricardo, who formulated the law of comparative (or relative)
advantage, all that is required for both countries to benefit from trade is that the opportunity costs of production (or relative prices) differ
between the two countries. Each country will tend to specialize in and export those goods for which it has a comparative or relative
advantage. See pages 67 to 70 in the prescribed book.
Question 4
Incorrect
Mark 0.00 out of 1.00
The balance of payments is a record of the transactions of each country with its trading partners. Use the following passage to answer the
question:
Source: Quartz Africa, https://qz.com/africa/2122487/african-governments-now-want-to-tax-your-netflix-and-chill/ (accessed 10 May 2022)
Which of the following is correct?
a. The streaming services will be recorded in the finance account as an inflow.
b. The streaming services will be recorded in the current account as an outflow.
c. The streaming services will be recorded in the financial account as an inflow.
d. The streaming services will be recorded in the current account as an inflow.
,The balance of payments records the transactions that a country conducts with the rest of the world. Goods and services are recorded in the 3
current account, while financial transactions such as trading in shares are recorded in the financial account. See Section 5.5 of the prescribed
book.
, Question 5 4
Correct
Mark 1.00 out of 1.00
MENU
In the 2020 Budget Speech, the National Treasury announced that the import tariff will decrease from 5.37% in 2019 to 4.40% in 2020, a
Dashboard
0.97% / What
decline. Courses / UNISA
is the / 2023
aim of the import/ tariffs
Semester 1 / does
and what ECS1601-23-S1
this imply to/ the
Online assessments
domestic / Assessment 2
firm’s production?
a. an import tariff is used to protect domestic firms, a 0.97% decline in import tariff will discourage domestic production and make
imported products cheaper.
b. an import tariff is used to protect foreign firms, a 0.97% decline in import tariff will encourage foreign firms to produce more for
export to SA.
c. an import tariff is used to protect domestic firms, a 0.97% decline in imports is too small to have an impact on the domestic firm’s
production.
d. an import tariff is used to protect domestic firms from trade exploitation, a 0.97% decline in imports will make imported goods more
expensive for domestic firms.
An import tariff is used to protect domestic firms from trade exploitation, a 0.97% decline in the import tariff will discourage domestic
production and make imported products cheaper.
Question 1
Correct
Mark 1.00 out of 1.00
South African firms purchase more US capital goods. The for dollars increases and rand against the dollar.
a. supply; depreciates
b. demand; depreciates
c. supply; appreciates
d. demand; appreciates
e. demand; decreases
Your answer is correct.
If South African purchases and thus imports more capital goods, like machinery etc., from the US, South African firms have to pay for the
imports in dollars. The demand for dollars on the South African foreign exchange market will increase, ceteris paribus, and therefore the
Rand will depreciate relative against to the dollar, ceteris paribus. Refer toSee pages 71 to 76, and Figure 4-3, and Tables 4-1 and 4-2 in the
prescribed textbook
Question 2
Correct
Mark 1.00 out of 1.00
Suppose that the price of Brent Crude oil, which is a South African import, falls and is denominated in US Dollars. What is the impact of the
price decrease on the foreign exchange market?
a. The supply of Dollars will increase and the Rand will appreciate.
b. The supply of Dollars will decrease and the Rand will depreciate.
c. The demand for Dollars will decrease and the Rand will appreciate.
d. The demand for Dollars will increase and the Rand will depreciate.
The decrease in the price of Brent Crude oil will decrease the demand for US Dollars, as this implies that less Rands will be needed to buy a
barrel of oil. Consequently, the decrease in the demand for Dollars will shift the demand curve to the left and the Rand will appreciate. See
Section 4.3 of the prescribed book.
, 2
uestion 3
Correct
Mark 1.00 out of 1.00
MENU
If two countries have differing opportunity costs of production for two goods, then
Dashboard / Courses / UNISA / 2023 / Semester 1 / ECS1601-23-S1 / Online assessments / Assessment 2
a. each country should specialise in the good for which it has a higher opportunity cost of production.
b. only the country with an absolute advantage in the production of both goods stands to gain from trade.
c. each country should purchase inputs from the other country in order to gain an absolute advantage.
d. each country should specialise in the production of the good for which it has a relative advantage.
e. each country should import all goods instead of producing them domestically.
Your answer is correct.
Absolute advantage is not a prerequisite for international trade. Trade can also be beneficial when one country is more efficient in the
production of both goods. According to the English economist, David Ricardo, who formulated the law of comparative (or relative)
advantage, all that is required for both countries to benefit from trade is that the opportunity costs of production (or relative prices) differ
between the two countries. Each country will tend to specialize in and export those goods for which it has a comparative or relative
advantage. See pages 67 to 70 in the prescribed book.
Question 4
Incorrect
Mark 0.00 out of 1.00
The balance of payments is a record of the transactions of each country with its trading partners. Use the following passage to answer the
question:
Source: Quartz Africa, https://qz.com/africa/2122487/african-governments-now-want-to-tax-your-netflix-and-chill/ (accessed 10 May 2022)
Which of the following is correct?
a. The streaming services will be recorded in the finance account as an inflow.
b. The streaming services will be recorded in the current account as an outflow.
c. The streaming services will be recorded in the financial account as an inflow.
d. The streaming services will be recorded in the current account as an inflow.
,The balance of payments records the transactions that a country conducts with the rest of the world. Goods and services are recorded in the 3
current account, while financial transactions such as trading in shares are recorded in the financial account. See Section 5.5 of the prescribed
book.
, Question 5 4
Correct
Mark 1.00 out of 1.00
MENU
In the 2020 Budget Speech, the National Treasury announced that the import tariff will decrease from 5.37% in 2019 to 4.40% in 2020, a
Dashboard
0.97% / What
decline. Courses / UNISA
is the / 2023
aim of the import/ tariffs
Semester 1 / does
and what ECS1601-23-S1
this imply to/ the
Online assessments
domestic / Assessment 2
firm’s production?
a. an import tariff is used to protect domestic firms, a 0.97% decline in import tariff will discourage domestic production and make
imported products cheaper.
b. an import tariff is used to protect foreign firms, a 0.97% decline in import tariff will encourage foreign firms to produce more for
export to SA.
c. an import tariff is used to protect domestic firms, a 0.97% decline in imports is too small to have an impact on the domestic firm’s
production.
d. an import tariff is used to protect domestic firms from trade exploitation, a 0.97% decline in imports will make imported goods more
expensive for domestic firms.
An import tariff is used to protect domestic firms from trade exploitation, a 0.97% decline in the import tariff will discourage domestic
production and make imported products cheaper.
