ECS1601 Assignment 5 (PRACTICE) Semester 1 2023

ECS1601 Assignment 5 (PRACTICE) Semester % TRUSTED workings, explanations and solutions. For assistance call or us on . [Questions] Question 1 (5 marks) Maximum word count: 100 words Suppose that you are at a retail store with your family. You come across two T-shirts, one made in South Africa and another made in the USA. With reference to the circular flow of income, withdrawals and injection, provide an explanation as to why it is better to purchase the South African manufactured T-shirt. Question 2 (10 marks) Maximum word count: 100 words Suppose Zimbabwe manage to turn around its economy which then results in an increase in production, income and spending on local goods and services. This will likely lead to an increase in the level of economic activities. What will be the impact on the demand for money in Zimbabwe? Explain using a diagram (s) Question 3 (10 marks) Maximum word count: 200 words Read the following news clip and answer the question. Fuel prices and other transport costs continue to rise in South Africa. Fuel prices increased by 7,2% between February and March, with inland 95-octane petrol rising by R1,46 per litre to reach a record high of R21,60 per litre. Fuel prices rose by an eye-watering 33,2% in the twelve months to March, with petrol prices climbing by 32,6% and diesel by 35,1%. The transport index in March was also driven higher by increases in toll fees, air transport and bus fares. Source: Statistics South Africa You're an economic adviser to the Central Bank and National Treasury and you're asked to advise both on: • the economic effects of fuel prices and transport cost increases. • the appropriate steps to address the economic effects mentioned above. Question 4 (5 marks) Have a look at the following diagram and answer the questions that follow: Calculate the equilibrium level of income after the introduction of government spending. Show all calculation steps.