ECS3701
Assignment 2 Semester 1 2025
Detailed Solutions, References & Explanations
Unique Number: 871621
Due date: 9 May 2025
QUESTION 1
a.
The decision by the South African Reserve Bank (SARB) to keep the repo rate
unchanged at 7.5% after previously lowering it by 75 basis points reflects a cautious but
supportive monetary policy stance. This approach is likely to have a positive effect on
the economy for the following reasons:
1. Lower borrowing costs: The recent interest rate cuts mean that loans are
cheaper, which can encourage businesses to invest and consumers to spend.
This stimulates economic activity.
2. Support for economic growth: SARB explicitly mentions that the rate cuts will
―support economic activity.‖ This suggests that even though the rate has now
been held steady, the overall policy direction is still geared toward encouraging
growth.
Terms of use
3. By making use of
Inflation under control: With inflation softening and expectations improving, this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
Assignment 2 Semester 1 2025
Detailed Solutions, References & Explanations
Unique Number: 871621
Due date: 9 May 2025
QUESTION 1
a.
The decision by the South African Reserve Bank (SARB) to keep the repo rate
unchanged at 7.5% after previously lowering it by 75 basis points reflects a cautious but
supportive monetary policy stance. This approach is likely to have a positive effect on
the economy for the following reasons:
1. Lower borrowing costs: The recent interest rate cuts mean that loans are
cheaper, which can encourage businesses to invest and consumers to spend.
This stimulates economic activity.
2. Support for economic growth: SARB explicitly mentions that the rate cuts will
―support economic activity.‖ This suggests that even though the rate has now
been held steady, the overall policy direction is still geared toward encouraging
growth.
Terms of use
3. By making use of
Inflation under control: With inflation softening and expectations improving, this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
