ECS1601 Assignment 4 (COMPLETE ANSWERS) 2025 - DUE 15 September 2025
Course
Economics IB (ECS1601)
Institution
University Of South Africa (Unisa)
Book
Understanding Macroeconomics
ECS1601 Assignment 4 (COMPLETE ANSWERS) 2025 - DUE 15 September 2025; 100% TRUSTED
Complete, trusted solutions and explanations
Question 1 [7 Marks] (Word Count = 100) With reference to the Circular flow model as well as
economic growth, detail and discuss two interventions that would most effectively support
economic resilience in Mitchells Plain?
With reference to the Circular Flow Model and economic growth, detail and discuss two
interventions that would most effectively support economic resilience in Mitchells Plain.
Answer:
The Circular Flow Model shows how income flows between households and firms, driving
economic activity. To boost economic resilience in Mitchells Plain, one effective intervention is
supporting small businesses and informal traders through microfinance and training, which
increases household income and consumption, stimulating demand. Another intervention is
investing in skills development and education to enhance human capital, leading to higher
productivity and attracting investment. Both interventions strengthen the flow of income and
production, fostering sustainable economic growth and reducing vulnerability to economic
shocks.
Question 2 [18 Marks] (Word Count = 450) Study the image showing Dr. David |. Ramadan’s X
post and the background to answer the questions 2.1 to 2.3. “> Dr. David I. Ramadan xX y
@DavidiRamadan - Follow Congratulations to all #Trump voters—thanks to your dear leader's
#tariff tantrum, nearly everything we buy will cost about 20% more in the coming year. And no,
“just buy American” isn't a fix—most of these items have no U.S. equivalent. That's just the
short-term hit. 3 : ~ 3:08 AM - Apr 3, 2025 @ Page 3 of 5 ECS1601 | Assessment 04 | Year 2025
A university of south africa UNISA Background In April 2025, US President Donald J Trump,
, implemented reciprocal tariffs for countries that traded with the USA. This is to address the
United States’ $1.3 Trillion (~R 22.84 trillion) Trade Deficit'. Amongst the countries that were
levied the highest tariff include South Africa’s neighbouring country, the Kingdom of Lesotho,
with a tariff of approximately 50%. In addition, the Republic of South Africa was also levied a
tariff of approximately 30% within the same time period and came into effect in August 2025.
You are an economics 1 student from UNISA and overhear some of your peers at the Spaza shop
discussing the matter and stating that it might not be a bad thing, “Donald Trump is doing well
to help his country”. 1 Explain the economic rationale behind the US tariffs implemented by
President Trump.
The tariffs were introduced as a response to the United States’ large trade deficit of $1.3 trillion.
By imposing tariffs on imports from trading partners like South Africa and Lesotho, the US aims
to make imported goods more expensive, encouraging consumers to buy domestically produced
goods. This protectionist measure is intended to reduce the trade deficit by lowering imports
and stimulating local manufacturing and employment.
2.2 Analyze the short-term and long-term impacts of these tariffs on South Africa and its
economy.
Short-term impacts:
The 30% tariff imposed on South African goods increases the price of exports to the US,
reducing their competitiveness. South African exporters may experience a decline in sales,
leading to lower production and potential job losses, especially in sectors reliant on US markets.
Import prices in South Africa may also rise if retaliatory tariffs or supply chain disruptions occur,
increasing costs for consumers and businesses.
Long-term impacts:
Persistent tariffs could force South African industries to diversify export markets and improve
competitiveness. However, prolonged trade restrictions may reduce foreign direct investment
and economic growth. Inflationary pressures could rise due to higher import costs, reducing
consumers’ purchasing power. The overall effect might slow South Africa’s economic growth and
exacerbate unemployment.
2.3 Evaluate the statement made by your peers that "Donald Trump is doing well to help his
country" in the context of global trade and economic interdependence.
While tariffs may protect certain US industries and jobs in the short term, the broader impact
can be negative. Tariffs often lead to higher prices for consumers and businesses that rely on
Course
Economics IB (ECS1601)
Institution
University Of South Africa (Unisa)
Book
Understanding Macroeconomics
ECS1601 Assignment 4 (COMPLETE ANSWERS) 2025 - DUE 15 September 2025; 100% TRUSTED
Complete, trusted solutions and explanations
Question 1 [7 Marks] (Word Count = 100) With reference to the Circular flow model as well as
economic growth, detail and discuss two interventions that would most effectively support
economic resilience in Mitchells Plain?
With reference to the Circular Flow Model and economic growth, detail and discuss two
interventions that would most effectively support economic resilience in Mitchells Plain.
Answer:
The Circular Flow Model shows how income flows between households and firms, driving
economic activity. To boost economic resilience in Mitchells Plain, one effective intervention is
supporting small businesses and informal traders through microfinance and training, which
increases household income and consumption, stimulating demand. Another intervention is
investing in skills development and education to enhance human capital, leading to higher
productivity and attracting investment. Both interventions strengthen the flow of income and
production, fostering sustainable economic growth and reducing vulnerability to economic
shocks.
Question 2 [18 Marks] (Word Count = 450) Study the image showing Dr. David |. Ramadan’s X
post and the background to answer the questions 2.1 to 2.3. “> Dr. David I. Ramadan xX y
@DavidiRamadan - Follow Congratulations to all #Trump voters—thanks to your dear leader's
#tariff tantrum, nearly everything we buy will cost about 20% more in the coming year. And no,
“just buy American” isn't a fix—most of these items have no U.S. equivalent. That's just the
short-term hit. 3 : ~ 3:08 AM - Apr 3, 2025 @ Page 3 of 5 ECS1601 | Assessment 04 | Year 2025
A university of south africa UNISA Background In April 2025, US President Donald J Trump,
, implemented reciprocal tariffs for countries that traded with the USA. This is to address the
United States’ $1.3 Trillion (~R 22.84 trillion) Trade Deficit'. Amongst the countries that were
levied the highest tariff include South Africa’s neighbouring country, the Kingdom of Lesotho,
with a tariff of approximately 50%. In addition, the Republic of South Africa was also levied a
tariff of approximately 30% within the same time period and came into effect in August 2025.
You are an economics 1 student from UNISA and overhear some of your peers at the Spaza shop
discussing the matter and stating that it might not be a bad thing, “Donald Trump is doing well
to help his country”. 1 Explain the economic rationale behind the US tariffs implemented by
President Trump.
The tariffs were introduced as a response to the United States’ large trade deficit of $1.3 trillion.
By imposing tariffs on imports from trading partners like South Africa and Lesotho, the US aims
to make imported goods more expensive, encouraging consumers to buy domestically produced
goods. This protectionist measure is intended to reduce the trade deficit by lowering imports
and stimulating local manufacturing and employment.
2.2 Analyze the short-term and long-term impacts of these tariffs on South Africa and its
economy.
Short-term impacts:
The 30% tariff imposed on South African goods increases the price of exports to the US,
reducing their competitiveness. South African exporters may experience a decline in sales,
leading to lower production and potential job losses, especially in sectors reliant on US markets.
Import prices in South Africa may also rise if retaliatory tariffs or supply chain disruptions occur,
increasing costs for consumers and businesses.
Long-term impacts:
Persistent tariffs could force South African industries to diversify export markets and improve
competitiveness. However, prolonged trade restrictions may reduce foreign direct investment
and economic growth. Inflationary pressures could rise due to higher import costs, reducing
consumers’ purchasing power. The overall effect might slow South Africa’s economic growth and
exacerbate unemployment.
2.3 Evaluate the statement made by your peers that "Donald Trump is doing well to help his
country" in the context of global trade and economic interdependence.
While tariffs may protect certain US industries and jobs in the short term, the broader impact
can be negative. Tariffs often lead to higher prices for consumers and businesses that rely on
