FINAL ONLINE SUMMATIVE ASSESSMENT

Bachelor of Business Administration

Bachelor of Public Administration

Bachelor of Commerce in Accounting

Bachelor of Commerce in Entrepreneurship

Bachelor of Commerce in Project Management

PROGRAMME Bachelor of Commerce in Retail Management

Bachelor of Commerce in International Business

Bachelor of Commerce in Financial Management

Bachelor of Commerce in Marketing Management

Bachelor of Commerce in Supply Chain Management

Bachelor of Commerce in Information and Technology Management

MODULE Economics 1B
YEAR One (1)
INTAKE January 2023 Semester 2
DATE 13 November 2023
SECTION A [100 MARKS]
Answer ALL the questions in this section.

Type ONLY the letter that represents the correct answer next to the corresponding number in your online answer
booklet. E.g. 26 B

Question 1 (4 Marks)
Which of the following is NOT a macroeconomic topic?

A. National GDP trends

B. The increase in consumer demand for smartphones in the last five years
C. The effect of an increasing unemployment rate in South Africa
D. Global oil prices in 2023

Question 2 (4 Marks)
“Australia has aimed to achieve full employment by implementing various employment and labor market
programs”. Achieving full employment would indicate that:

A. Everyone in the Australian economy has a job.

B. There is no unemployment in the economy.
C. Australia has reached the level of employment where all workers are fully utilized, and there is no
cyclical unemployment.
D. Only a small percentage of the Australian workforce is unemployed.

Question 3 (4 Marks)
In March 2023, imports for the US exceeded their exports by $60.6 billion. In June 2023, the imports
exceeded the exports by $74.6 billion. If this trend continues, what impact can this have on the US in the long
term?

A. Increased foreign investment

B. Stronger domestic currency
C. Decreased trade protectionism
D. Accumulation of foreign debt
Question 4 (4 Marks)
In the context of the circular flow model of the economy, which of the following best describes the relationship
between households, businesses, and the government?

A. Households earn income by buying goods and services in the product market, spend that income
on businesses, and pay taxes to the government, which then uses the revenue to provide
resources.
B. Households earn income by providing resources, spend that income on goods and services in the
product market, and pay taxes to the government, which then uses the revenue for public services.
C. Households earn income by paying taxes to the government, which then uses that revenue to buy
goods and services from businesses, and businesses use the income to pay wages to households.
D. Households earn income by providing resources to the government, which then redistributes that
income among businesses to stimulate production and spending.

Question 5 (4 Marks)
Assume you have the following data for a hypothetical country for a specific year (in billions of ZAR):

Wages and Salaries: R2,500

Interest: R300
Rent: R200
Profits: R1,000
Taxes (Indirect Taxes Minus Subsidies): R400
Depreciation: R500

Given the data above, which of the following methods of calculating Gross Domestic Product (GDP) may be
used?

A. Expenditure approach
B. Income approach
C. Product approach
D. Trade approach

Read the following statement and answer questions 6 and 7:

“In 2022, India’s GDP was $3,386.4 billion whereas its GNP was $3,370.15 billion”.

Question 6 (4 Marks)
The reason for the difference in the two figures is that:

A. GDP includes foreign investment, while GNP does not.

B. GNP is used for developed countries, while GDP is used for developing countries.
C. GDP is a measure of the overall wealth of a nation, while GNP focuses on the distribution of
income within a country.
D. GDP measures the total economic output within a country's borders, while GNP considers the
income earned by a country's residents domestically and abroad.
Question 7 (4 Marks)
Why should India be cautious about using Gross Domestic Product (GDP) as the primary measure of
economic growth?

A. GDP does not account for the value of services, only goods.
B. GDP provides an accurate reflection of income inequality.
C. GDP does not consider changes in a country's population.
D. GDP is unaffected by changes in government policies.

Question 8 (4 Marks)
Imagine you have R1,000 in cash, and you deposit this money into a savings account at a bank. What
function of money is this action demonstrating?

A. Medium of Exchange
B. Unit of Account
C. Store of Value
D. Measure of Value

Read the following statement and answer questions 9 and 10:

“Earlier this year, the South African Reserve Bank raised its interest rate to a 14-year high, a move Governor Lesetja
Kganyago described as "bitter medicine" needed to tame inflation”.

Question 9 (4 Marks)
What is the primary function of the South African Reserve Bank (SARB) being demonstrated in this case?

A. Regulation of the stock market

B. Conducting of monetary policy and ensuring price stability
C. Management of the country's foreign affairs
D. Overseeing of the national healthcare system

Question 10 (4 Marks)
Which of the following measures may assist the SARB in decreasing the money supply in the economy to
“tame inflation”?

A. An increase in the currency held by the public

B. An increase in government spending
C. A decrease in interest rates
D. An increase in bank lending
Question 11 (4 Marks)
“Competition authorities in the world over have observably expanded their consideration of transactions from
applying a purely competition-focused lens to one that incorporates the broader needs of society. Many
African merger control regimes have developed a competition policy approach that balances traditional
competition law considerations with public interest concerns, especially in terms of market concentration,
access to competitive markets for small and medium enterprises and employment considerations”.

The economic problem being described above is ____ which can be solved through _____.

A. Hyperinflation; fiscal policy measures.

B. Unemployment; monetary policy adjustments.
C. Market failure; enforcing antitrust laws and consumer protection regulations.
D. Budget deficits; supply-side economic policies.

Read the following statement and answer questions 12 and 13:

“Plagued by blackouts and high energy prices, South Africa’s energy sector is on the edge of being privatised by
President Cyril Ramaphosa”.

Question 12 (4 Marks)
Which of the following may be the primary reason for the privatization of South Africa’s energy sector?

A. To increase government control and influence in the economy.

B. To reduce private sector participation and competition.
C. To enhance efficiency, reduce government intervention, and raise capital.
D. To establish a government monopoly in the energy sector.

Question 13 (4 Marks)
What school of economic thought does the decision to privatize the energy sector allude to?

A. Keynesian economics
B. Classical economics
C. Behavioural economics
D. Marxist economics

Question 14 (4 Marks)
In 2022, the corporate tax rate was reduced from 28% to 27%. This decision forms part of South Africa’s
_________.

A. Fiscal policy
B. Monetary policy
C. Industrial policy
D. Trade policy
Question 15 (4 Marks)
What is a key distinction between monetary policy and fiscal policy in economic management?

A. Monetary policy involves government spending and taxation, while fiscal policy focuses on interest
rates and money supply.
B. Monetary policy is set by the central bank, while fiscal policy is determined by the government's
budget decisions.
C. Monetary policy primarily influences employment and economic growth, while fiscal policy mainly
affects inflation.
D. Monetary policy is a short-term strategy, while fiscal policy is a long-term approach to economic
management.

Question 16 (4 Marks)
Which of the following statements best describes the multiplier effect in economics?

A. The process of reducing government spending to stimulate economic growth.

B. An increase in consumer saving when government expenditure decreases.
C. A phenomenon where an initial increase in spending leads to a more significant overall increase in
economic output.
D. The concept of a fixed relationship between inflation and unemployment rates.

Read the following statement and answer questions 17 and 18:

Oil prices are on track to reach $100 a barrel this month for the first time in 2023 after surging by almost 30% since
June, after Russian and Saudi Arabian production cuts and rising demand from China.

Question 17 (4 Marks)
With many industries being heavily reliant on energy and transportation, what type of inflation would this lead
to in South Africa?

A. Demand-pull inflation
B. Cost-push inflation
C. Stagflation
D. Hyperinflation

Question 18 (4 Marks)
What is one of the potential effects of the aforementioned inflation on the South African economy?

A. Decreased purchasing power of money.

B. Increased consumer savings.
C. Reduced interest rates on loans.
D. Higher demand for imports.
Question 19 (4 Marks)
Which of the following is an example of structural unemployment?

A. A teacher who is temporarily unemployed during the summer break.

B. An auto worker who is laid off due to a recession in the automotive industry.
C. There is a reduction in staffing in the factory due to increased automation.
D. A retail worker who is temporarily without a job because their store is closed for a public holiday.

Question 20 (4 Marks)
Which of the following individuals may NOT be considered unemployed in official labor statistics?

A. A recent college graduate actively seeking their first job.

B. A retiree who has left the workforce and does not wish to work.
C. A part-time worker who wants a full-time job but cannot find one.
D. A person who lost their job and is actively looking for new employment.

Question 21 (4 Marks)
Given that Japan’s economy is currently in the expansion phase of the business cycle, which of the following
is most likely to occur in Japan?

A. Rising unemployment and economic contraction.

B. A decrease in consumer spending and business investments.
C. Increasing economic activity, rising employment, and growing consumer confidence.
D. A decrease in government spending and fiscal austerity measures.

Read the following statement and answer questions 22 and 23:

“Africa is set to outperform the rest of the world in economic growth over the next two years, with real gross domestic
product (GDP) averaging around 4% in 2023 and 2024”.

Question 22 (4 Marks)
Which of the following is a common characteristic of a country in Africa?

A. High levels of industrialization and advanced technology.

B. A well-developed and diversified service sector.
C. High per capita income and living standards.
D. Limited access to basic healthcare and education for a significant portion of the population.
Question 23 (4 Marks)
Which of the following is a key factor to consider to ensure long-term economic growth as planned?

A. Short-term fluctuations in the business cycle.

B. Government policies focused on income redistribution.
C. Investment in physical and human capital.
D. A high inflation rate.

Question 24 (4 Marks)
Which of the following statements best exemplifies the concept of relative advantage in international trade?

A. USA can produce both wheat and textiles more efficiently than any other country.
B. USA can produce wheat more efficiently than China, while China can produce textiles more
efficiently than USA.
C. USA can produce more wheat than China, but China can produce more textiles than USA.
D. USA and China have the same level of efficiency in producing wheat and textiles.

Question 25 (4 Marks)
The value of the Russian Ruble changed from 94 to the dollar to 91 to the dollar. What is the likely effect of
this change in the foreign exchange market?

A. It will make Russia’s imports cheaper but may harm its export competitiveness.
B. It will boost Russia’s exports, making them more competitive.
C. It will have no impact on trade, as exchange rates do not influence international commerce.
D. It will encourage capital outflows and discourage foreign investment.

END OF PAPER