ECS1601 Assignment 7 (COMPLETE
ANSWERS) 2024 - DUE 29 October 2024
, ECS1601 Assignment 7 (COMPLETE ANSWERS) 2024 -
DUE 29 October 2024
Question 1 (5 marks) Maximum word count: 100 words 1.1
Suppose you live in South Africa and have the option to buy
proudly South African products or international brands. With
reference to the circular flow of goods and services and the
circular flow of income and spending between households, firms,
government and the foreign sector, provide an explanation as to
why it is better to purchase the proudly South African products
and also explain the opportunity costs of buying international
items instead of those produced locally. (5 marks)
Buying proudly South African products strengthens the circular flow of income within South
Africa. When households buy local goods, they support domestic firms, leading to more local
production, job creation, and increased household income, which fuels further spending within
the economy. This positive flow benefits the government through higher tax revenues and
reduces reliance on the foreign sector. Conversely, purchasing international brands diverts
income out of the country, which could lead to reduced domestic employment and economic
growth. The opportunity cost of choosing international products is the potential loss of support
for local industries, jobs, and economic self-sufficiency.
Question 2 (10 marks) Maximum word count: 150 words 2.1 The
following question is based on the passage below: NEWS Extract
2A After 2.0% economic growth for 2022 as a whole, South
Africa's economy is now 0.3% bigger than it was in 2019 before
the COVID-19 pandemic, Stats SA said, adding that the
expansion was smaller than a 3.5% rise in the country's
population over the same period. Gross domestic product grew
0.9% year on year in the fourth quarter, worse than forecasts for a
2.2% expansion. Source: Reuters (2023) < With the aid of a
diagram, explain how the money market in South Africa will be
affected by the abovementioned changes in economic activity.
The direction of any changes should be clearly indicated by using
arrows. (4 marks) Page 4 of 7 ECS1601 | Assessment 07 | Year
2024 2.2 • What effect will a change in economic growth
prospects of China, as described in Extract 2B, have on the
ANSWERS) 2024 - DUE 29 October 2024
, ECS1601 Assignment 7 (COMPLETE ANSWERS) 2024 -
DUE 29 October 2024
Question 1 (5 marks) Maximum word count: 100 words 1.1
Suppose you live in South Africa and have the option to buy
proudly South African products or international brands. With
reference to the circular flow of goods and services and the
circular flow of income and spending between households, firms,
government and the foreign sector, provide an explanation as to
why it is better to purchase the proudly South African products
and also explain the opportunity costs of buying international
items instead of those produced locally. (5 marks)
Buying proudly South African products strengthens the circular flow of income within South
Africa. When households buy local goods, they support domestic firms, leading to more local
production, job creation, and increased household income, which fuels further spending within
the economy. This positive flow benefits the government through higher tax revenues and
reduces reliance on the foreign sector. Conversely, purchasing international brands diverts
income out of the country, which could lead to reduced domestic employment and economic
growth. The opportunity cost of choosing international products is the potential loss of support
for local industries, jobs, and economic self-sufficiency.
Question 2 (10 marks) Maximum word count: 150 words 2.1 The
following question is based on the passage below: NEWS Extract
2A After 2.0% economic growth for 2022 as a whole, South
Africa's economy is now 0.3% bigger than it was in 2019 before
the COVID-19 pandemic, Stats SA said, adding that the
expansion was smaller than a 3.5% rise in the country's
population over the same period. Gross domestic product grew
0.9% year on year in the fourth quarter, worse than forecasts for a
2.2% expansion. Source: Reuters (2023) < With the aid of a
diagram, explain how the money market in South Africa will be
affected by the abovementioned changes in economic activity.
The direction of any changes should be clearly indicated by using
arrows. (4 marks) Page 4 of 7 ECS1601 | Assessment 07 | Year
2024 2.2 • What effect will a change in economic growth
prospects of China, as described in Extract 2B, have on the
