www.studynotesunisa.co.za
An overview of the South African macro-economic environment 1
Macroeconomics studies the determination of the level of output and income
for a specific firm.
False. Macroeconomics deals with the economy as a whole and not a specific
firm.
In macroeconomics we focus on the determination of the demand for and
supply of individual goods and the determination of their prices.
False. The focus is on the current level of output and income, given the
structure of the economy.
In macroeconomics we focus on the interaction between different markets,
such as the goods market, the financial market, the labour market and the
foreign exchange market.
True. That is what we will be studying in this module
The economic crisis of 2007 – 2009 originated in the financial markets in the
United States of America.
True
The impact of the economic crises on the South African economy was mainly
due to the decline in the growth rates of our trading partners.
True. Is was due to the decline in exports and not due to the instability of the
financial sector in South Africa
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Given the following information the economic growth rate for year 2 is -4.46%:
- Real GDP for year 1: R1 751 499 million
- Real GDP for year 2: R1 673 259 million
True
Since 1993 economic growth has always been positive in South Africa.
False
Real GDP per capita is widely used as a measure of economic welfare or
wellbeing of the residents of a country.
True
In South Africa the real GDP per capita has continuously increased since 1993.
False. For some years the increase in population was greater than the
economic growth rate.
The main focus of this macroeconomics module is the study of determinants of
the long-term growth potential of an economy.
False. We will be studying stabilisation policies.
The impact of fiscal and monetary policy on the level of output and income is
an important topic in this module.
True
The main instrument of fiscal policy is the budget, while the main policy
variable is the interest rate.
False. The policy variables are government spending and taxation
,www.studynotesunisa.co.za
A contractionary monetary policy implies a decrease in government spending
and an increase in taxation.
False. Contractionary monetary policy implies a decrease in the money supply
and therefore results in an increase in the interest rate.
The labour absorption capacity of the formal sector in South Africa consistently
increased during the 1990s.
False. It declined
The goods market 2
Activity 2.1
a. Expenditure on GDP includes imports but excludes exports.
False. Expenditure on GDP includes exports but excludes imports.
b. In South Africa final consumption expenditure by government was
higher than exports in 2013.
False. Final consumption expenditure by government was lower.
c. Final consumption expenditure by government in South Africa includes
expenditure on capital goods.
False. It does not include expenditure on capital goods.
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d. During 2013 private firms were responsible for most of the investment
spending in South Africa.
True. They were responsible for 64.39% if investment.
e. Imports consist only of imported final goods and services consumed by
households.
False. It also includes the importation of intermediate and capital goods.
f. If exports exceed imports a budget surplus exits.
False. If exports exceed imports a trade surplus exists. A budget surplus occurs
when government revenue exceeds government spending.
g. If imports exceed exports gross domestic expenditure exceeds
expenditure on gross domestic product.
True. Spending by inhabitants of a country is more than what is spent on the
goods and services produced between the borders of the country.
h. The goods market is the market where factors of production are sold to
firms.
False. It is called the factor market. In the goods market goods and services are
traded.
Activity 2.2
An overview of the South African macro-economic environment 1
Macroeconomics studies the determination of the level of output and income
for a specific firm.
False. Macroeconomics deals with the economy as a whole and not a specific
firm.
In macroeconomics we focus on the determination of the demand for and
supply of individual goods and the determination of their prices.
False. The focus is on the current level of output and income, given the
structure of the economy.
In macroeconomics we focus on the interaction between different markets,
such as the goods market, the financial market, the labour market and the
foreign exchange market.
True. That is what we will be studying in this module
The economic crisis of 2007 – 2009 originated in the financial markets in the
United States of America.
True
The impact of the economic crises on the South African economy was mainly
due to the decline in the growth rates of our trading partners.
True. Is was due to the decline in exports and not due to the instability of the
financial sector in South Africa
,www.studynotesunisa.co.za
Given the following information the economic growth rate for year 2 is -4.46%:
- Real GDP for year 1: R1 751 499 million
- Real GDP for year 2: R1 673 259 million
True
Since 1993 economic growth has always been positive in South Africa.
False
Real GDP per capita is widely used as a measure of economic welfare or
wellbeing of the residents of a country.
True
In South Africa the real GDP per capita has continuously increased since 1993.
False. For some years the increase in population was greater than the
economic growth rate.
The main focus of this macroeconomics module is the study of determinants of
the long-term growth potential of an economy.
False. We will be studying stabilisation policies.
The impact of fiscal and monetary policy on the level of output and income is
an important topic in this module.
True
The main instrument of fiscal policy is the budget, while the main policy
variable is the interest rate.
False. The policy variables are government spending and taxation
,www.studynotesunisa.co.za
A contractionary monetary policy implies a decrease in government spending
and an increase in taxation.
False. Contractionary monetary policy implies a decrease in the money supply
and therefore results in an increase in the interest rate.
The labour absorption capacity of the formal sector in South Africa consistently
increased during the 1990s.
False. It declined
The goods market 2
Activity 2.1
a. Expenditure on GDP includes imports but excludes exports.
False. Expenditure on GDP includes exports but excludes imports.
b. In South Africa final consumption expenditure by government was
higher than exports in 2013.
False. Final consumption expenditure by government was lower.
c. Final consumption expenditure by government in South Africa includes
expenditure on capital goods.
False. It does not include expenditure on capital goods.
, www.studynotesunisa.co.za
d. During 2013 private firms were responsible for most of the investment
spending in South Africa.
True. They were responsible for 64.39% if investment.
e. Imports consist only of imported final goods and services consumed by
households.
False. It also includes the importation of intermediate and capital goods.
f. If exports exceed imports a budget surplus exits.
False. If exports exceed imports a trade surplus exists. A budget surplus occurs
when government revenue exceeds government spending.
g. If imports exceed exports gross domestic expenditure exceeds
expenditure on gross domestic product.
True. Spending by inhabitants of a country is more than what is spent on the
goods and services produced between the borders of the country.
h. The goods market is the market where factors of production are sold to
firms.
False. It is called the factor market. In the goods market goods and services are
traded.
Activity 2.2
