The Independent Institute of Education - The Complete Academic Support Hub

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MODULE NAME:	MODULE CODE:
ECONOMICS 1B	PMAC6112/d/e/f/p/w
ECONOMICS B (MACRO)	ECMS6212/d

ASSESSMENT TYPE:	REVISED EXAM‐PAPER ONLY
TOTAL MARK ALLOCATION:	120 MARKS
TOTAL TIME:	The time given to students to complete this assessment will be indicated on your module in Learn
By submitting this assessment, you acknowledge that you have read and understood all the rules as per the terms in the registration contract, in particular the assignment and assessment rules in The IIE Assessment Strategy and Policy (IIE009), the intellectual integrity and plagiarism rules in the Intellectual Integrity Policy (IIE023), as well as any rules and regulations published in the student portal. INSTRUCTIONS: 1. Please adhere to all instructions. These instructions are different from what is normally present, so take time to go through these carefully. 2. Independent work is required. Students are not allowed to work together on this assessment. Any contraventions of this will be handled as per disciplinary procedures in The IIE policy. 3. No material may be copied from original sources, even if referenced correctly unless it is a direct quote indicated with quotation marks. 4. All work must be adequately and correctly referenced. 5. You should paraphrase (use your own words) the concepts that you are referencing, rather than quoting directly. 6. This is an open‐book assessment. 7. Assessments must be typed unless otherwise specified. 8. Ensure that you save a copy of your responses.
Additional instructions: 1. Calculators are allowed. 2. For multiple‐choice questions, give only one (1) response per question. The marker will ignore any question with more than one answer unless otherwise stated. You should, therefore, be sure of your answer before committing it to paper. 3. This assessment has Seven Sections. You are required to answer All of these sections. 4. Answer All Questions. 5. Show all calculations, where applicable (marks may be awarded for this). 6. Instructions for assessments including drawings:

8.1 Complete your responses in a Word document.
8.2 The document name must be your name.student number.Module Code.
8.3 Once you have completed the assessment, upload your document under the
submission link in the correct module in Learn.

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	Drawings must be done on A4 paper and your name and student number must be included on all sheets. A 10mm border must be drawn around your drawing sheet and a title block must be inserted at the right‐hand corner. Supply information as requested. Marks will be lost for poor planning and layout. Complete each of the questions on a separate page. Make use of various pencils, erasers and a viewfinder only. Draw all the required drawings on drawing paper as required.
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Referencing Rubric
Providing evidence based on valid and referenced academic sources
is a fundamental educational principle and the cornerstone of high‐
quality academic work. Hence, The IIE considers it essential to
develop the referencing skills of our students in our commitment to
achieve high academic standards. Part of achieving these high
standards is referencing in a way that is consistent, technically
correct and congruent. This is not plagiarism, which is handled
differently.
Poor quality formatting in your referencing will result in a penalty of
a maximum of ten percent being deducted from the percentage
awarded, according to the following guidelines. Please note,
however, that evidence of plagiarism in the form of copied or
uncited work (not referenced), absent reference lists, or
exceptionally poor referencing, may result in action being taken in
accordance with The IIE’s Intellectual Integrity Policy (0023).
Markers are required to provide feedback to students by indicating
(circling/underlining) the information that best describes the
student’s work.
Minor technical referencing errors: 5% deduction from the
overall percentage – the student’s work contains five or more
errors listed in the minor errors column in the table below.
Major technical referencing errors: 10% deduction from the
overall percentage – the student’s work contains five or more
errors listed in the major errors column in the table below.
If both minor and major errors are indicated, then 10% only (and
not 5% or 15%) is deducted from the overall percentage. The
examples provided below are not exhaustive but are provided to
illustrate the error

Required: Technically correct referencing style	Minor errors in technical correctness of referencing style Deduct 5% from percentage awarded	Major errors in technical correctness of referencing style Deduct 10% from percentage awarded
Consistency  The same referencing format has been used for all in‐text references and in the bibliography/reference list.	Minor inconsistencies.  The referencing style is generally consistent, but there are one or two changes in the format of in‐text referencing and/or in the bibliography.  For example, page numbers for direct quotes (in‐text) have been provided for one source, but not in another instance. Two book chapters (bibliography) have been referenced in the bibliography in two different formats.	Major inconsistencies.  Poor and inconsistent referencing style used in‐ text and/or in the bibliography/ reference list.  Multiple formats for the same type of referencing have been used.  For example, the format for direct quotes (in‐text) and/or book chapters (bibliography/ reference list) is different across multiple instances.
Technical correctness  Referencing format is technically correct throughout the submission.  Position of the reference: a reference is directly associated with every concept or idea.  For example, quotation marks, page numbers, years, etc. are applied correctly, sources in the bibliography/reference list are correctly presented.	Generally, technically correct with some minor errors.  The correct referencing format has been consistently used, but there are one or two errors.  Concepts and ideas are typically referenced, but a reference is missing from one small section of the work.  Position of the references: references are only given at the beginning or end of every paragraph.  For example, the student has incorrectly presented direct quotes (in‐text) and/or book chapters (bibliography/reference list).	Technically incorrect.  The referencing format is incorrect.  Concepts and ideas are typically referenced, but a reference is missing from small sections of the work.  Position of the references: references are only given at the beginning or end of large sections of work.  For example, incorrect author information is provided, no year of publication is provided, quotation marks and/or page numbers for direct quotes missing, page numbers are provided for paraphrased material, the incorrect punctuation is used (in‐text); the bibliography/reference list is not in alphabetical order, the incorrect format for a book chapter/journal article is used, information is missing e.g. no place of publication had been provided (bibliography); repeated sources on the reference list.
Congruence between in‐text referencing and bibliography/ reference list  All sources are accurately reflected and are all accurately included in the bibliography/ reference list.	Generally, congruence between the in‐ text referencing and the bibliography/ reference list with one or two errors.  There is largely a match between the sources presented in‐text and the bibliography.  For example, a source appears in the text, but not in the bibliography/ reference list or vice versa.	A lack of congruence between the in‐text referencing and the bibliography.  No relationship/several incongruencies between the in‐text referencing and the bibliography/reference list.  For example, sources are included in‐text, but not in the bibliography and vice versa, a link, rather than the actual reference is provided in the bibliography.
In summary: the recording of references is accurate and complete.	In summary, at least 80% of the sources are correctly reflected and included in a reference list.	In summary, at least 60% of the sources are incorrectly reflected and/or not included in reference list.

Overall Feedback about the consistency, technical correctness and congruence between in‐text referencing and bibliography:
………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….
………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….
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Question 1 (Marks: 20)
Multiple‐choice questions: Select one correct answer for each of the following. In your answer booklet, write down only the number of the question and next to it, the letter of the correct answer.
Q.1.1	An increase in the budget deficit is the result of:	(2)
(a)	Expansionary monetary policy;
(b)	Contractionary monetary policy;
(c)	Expansionary fiscal policy;
(d)	Contractionary fiscal policy.
Q.1.2	Company tax is a:	(2)
(a)	Progressive, direct tax;
(b)	Progressive, indirect tax;
(c)	Proportional direct tax;
(d)	Regressive indirect tax.
Q.1.3	In the base year, a country produced 50 units of output at a price of R6,00 each for a nominal GDP of R300. This year it produces 60 units of output at a price of R8,00 each. What is the percentage change in real GDP since the base year?	(2)
(a)	5%;
(b)	10%;
(c)	20%;
(d)	15%.
Q.1.4	Which of the following statements about Fiscal Policy is INCORRECT?	(2)
(a)	In order to combat inflation, the South African Reserve Bank must apply a contractionary fiscal policy;
(b)	A contractionary fiscal policy can result in higher levels of unemployment;
(c)	Expansionary fiscal policy will increase the budget deficit;
(d)	The application of fiscal policy will have no effect on aggregate supply in the AD‐AS model.

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Q.1.5	If the inflation rate is 6% and Susan receives a 6% increase in income, then, over the year, Susan’s:	(2)
(a)	Real and nominal income both remain unchanged;
(b)	Real and nominal income both rise;
(c)	Real income rises but nominal income remains unchanged;
(d)	Nominal income rises but real income remains unchanged.
Q.1.6	Given the import function, Z = 300 + 2/3Y, which of the following statements is correct?	(2)
(a)	The marginal propensity to save is 1/3;
(b)	The induced component is 300;
(c)	2/3 is the proportion of any income spent on imports;
(d)	None of the statements is correct.
Q.1.7	An increase of R5 billion in income in a macroeconomy leads to an increase in R3 billion in consumption spending. From this information, we can determine that the marginal propensity to save in this economy is:	(2)
(a)	0.6;
(b)	0.5;
(c)	0.3;
(d)	0.4.
Q.1.8	Mr Brown has recently been retrenched. The firm he worked for had to retrench a number of staff due to the downturn in the economy. Mr Brown has not managed to find alternative employment. We can say he is _________________ unemployed.	(2)
(a)	Structurally;
(b)	Cyclically;
(c)	Seasonally;
(d)	Frictionally.
Q.1.9	If the CPI was 106 in 2013 and 116 in 2014, the inflation rate in 2014 was:	(2)
(a)	106%;

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(b)	116%;
(c)	9.4%;
(d)	16%
Q.1.10	Strikes across a wide range of industries in South Africa in the first half of 2020 can be illustrated in the AD‐AS model as a:	(2)
(a)	Leftward shift of the AD curve;
(b)	Rightward shift of the AD curve;
(c)	Leftward shift of the AS curve;
(d)	Rightward shift of the AS curve.

Question 2 (Marks: 20)
The following information is provided about an open economy with a government. Use the information to answer the questions that follow: C = 450 + 0.4Y I = 350 G = 150 X = 70 Z = 35 + 0.1Y T = 0.15Y Yf = 1550
Q.2.1	Calculate the level of autonomous spending in this economy.	(2)
Q.2.2	Calculate the size of the multiplier (Note: Round your answer to two decimal places)	(4)
Q.2.3	Calculate the equilibrium level of income (Hint: use the multiplier method)	(2)

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Q.2.4	Calculate the tax revenue to the government of this country when the economy remains in equilibrium.	(2)
Q.2.5	Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%.	(6)
Q.2.6	Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?	(4)

Question 3 (Marks: 25)
Q.3.1	The monetary transmission mechanism can be depicted in the form of a graph or using symbols. Explain, with the aid of symbols, the monetary transmission mechanism when interest rates increase (Note: Prices and wages are variable.)	(10)
Q.3.2	Explain, using the AD‐AS model, how the South African Government can use fiscal policy as a tool to recover from the negative effects of this COVID‐19 pandemic. Your answer must include the following: Marks will be awarded for your ability to integrate theory with the scenario provided.	(15)

 The description of the type of fiscal policy required; (4)
 An explanation of how the implementation of this tool will work their way
through the economy to achieve the desired effect; (6)
 The AD‐AS graph showing the implications of your recommendations. (5)

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Question 4 (Marks: 10)

Explain, with the aid of a graph, the effect on the rand/dollar exchange rate and the equilibrium
quantity of dollars if there is a decrease in imports from the USA to South Africa.
In your answer comment on the effect of this on the current account balance as well as on
domestic prices.
(Note: 5 marks for the graph and 5 marks for the explanation of the graph)

Question 5 (Marks: 15)

Explain, with the aid of a graph, the demand‐pull inflation. In your answer, consider the following:
You will receive more marks for your own original examples than for examples in your
textbook, from your lecturer, or on Learn.

 Graphical illustration of the demand‐pull inflation (5)
 Provide any three of your own examples/scenario that might cause the demand‐pull
inflation (6)
 Recommend the policy tools to use in order to curb each type of inflation mentioned
above (4)

Question 6 (Marks:10)
What type of unemployment does each of the following represent? Explain your answers.
Q.6.1	Workers at a clothing factory lose their jobs when the firm relocates to another province.	(2)
Q.6.2	Workers at a factory making floppy disks lose their jobs when the firm goes under due to competition from USB’s.	(2)
Q.6.3	Migrant farm workers’ employment is terminated when the harvest is finished.	(2)
Q.6.4	Workers at the car plant are laid off as a result of a slump in motorcar sales.	(2)

Q.6.5

Worker decides to resign from his firm to find himself, so he can follow his
passion and apply for a different job in a near future.

(2)

Question 7 (Marks: 20)
Q.7.1	Use the table below to answer the questions that follow:
Q.7.1.1	Calculate the inflation rate for the year 2018.	(3)
Q.7.1.2	Does the inflation rate you calculated above fall into the South Africa inflation target?	(2)
Q.7.2	Use the following composition of expenditure for the economy of a country named the Republic of Tapuwa, for the year ended 2019 to answer the questions below: Show all calculations and formulae.
Q.7.2.1	Calculate the value of the country’s GDE (Gross Domestic Expenditure).	(3)

YEAR 2019 2018 2017 2016
CPI 213.8 212.2 202.6 200.2
COMPONENT R millions
Consumption expenditure (C) 9 000
Investment (I) 6 500
Government spending (G) 7 000
Exports (X) 1 800
Imports (Z) 2 400
Depreciation 700
Foreign payment to the rest of the
world
300
Foreign payment from the rest of the
world
250

Q.7.2.2	Compute the value for the country’s GDP (Gross Domestic Product) at market price.	(2)
Q.7.2.3	Determine the value of the country’s NNI (Net National Income) at market price.	(3)
Q.7.2.4	If it is predicted that the GDP will increase to 22 000 in 2020, calculate the growth rate between 2019 and 2020.	(3)
Q.7.2.5	The measure of GDP for economic growth is not always perfect. Describe any two problems that are associated with GDP as a measure of economic growth.	(4)

END OF PAPER