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ASSIGNMENT 2ND SEMESTER :
MACROECONOMICS (MAC)
ECONOMICS 1 (ECO101)
CHAPTERS COVERED
:
3, 4, 5, 15, 16, AND 17
DUE DATE
:
3:00 p.m. 21 AUGUST 2012
TOTAL MARKS
:
100
MATERIAL REQUIRED
:
ANSWER SHEET PAGE 9
INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING ASSIGNMENTS
The complete ‘Instructions to Students for Completing and Submitting Assignments’ must be
collected from any IMM GSM office, the relevant Student Support Centre or can be downloaded
from the IMM GSM website. It is essential that the complete instructions be studied prior to
commencing your assignment. The following points highlight only a few important notes.
1. You are required to submit ONE assignment per subject.
2. The assignment will contribute 20% towards the final examination mark, and the other 80% will
be contributed by the examination, however, the examination papers will count out of 100%.
3. Although your assignment will contribute towards your final examination mark, you do not have
to earn credits for admission to the examinations; you are automatically accepted on registering
for the exam.
4. Number all the pages of your assignment (e.g. page 1 of 4) and write your name and surname,
student number and subject at the top of each page.
5. The IMM GSM requires assignments to be presented in a typed format, on plain A4 paper.
Unless otherwise specified, this assignment must be completed within a limit of 1500 words,
excluding the bibliography. Students who exceed the word limit may find that only part of the
submitted assignment will be marked.
6. A separate assignment cover, which is provided by the IMM GSM, must be attached to the front
of each assignment.
7. Retain a copy of each assignment before submitting, in case the original does not reach the
IMM GSM.
8. The assignment due date refers to the day up to which assignments will be accepted for
marking purposes. The deadline is 3:00 p.m. on 21 August 2012. Late assignments will be
accepted, but 25 marks will be deducted from the maximum mark, if received after 3:00 p.m. on
21 August 2012 and up to 5:00 p.m. the following day, after which no assignments will be
accepted.
9. If you fail to follow these instructions carefully, the IMM Graduate School of Marketing cannot
accept responsibility for the return of the assignment. It may even result in your assignment not
being marked.
Results will be available on the IMM GSM website, www.immgsm.ac.za, on Friday, 5 October 2012.
Assignment: 2nd Semester 2012
© IMM Graduate School of Marketing
MAC/ECO101
Page 2 of 9
SPECIFIC INSTRUCTIONS:
Answer ALL the questions
Show ALL steps in calculations
QUESTION 1
[50]
Indicate your answers to each of the following questions on the answer sheet
provided. Each answer is worth two (2) marks. For each section below select the
MOST APPROPRIATE answer from the choices given. Mark your answers with an X
in the correct block on the ANSWER SHEET on page 9.
1.1.
Which of the following does not represent a key macroeconomic variable?
a. The unemployment rate
b. The inflation rate
c. Gross Domestic Product (GDP)
d. Income distribution
e. The population growth rate
1.2.
If we were to add up the value of output of all organisations in the economy,
we would
a. obtain GDP at factor cost.
b. obtain GDP at market prices.
c. obtain GDP using the income method.
d. overestimate the value of production taking place in the economy.
e. underestimate the value of production taking place in the economy.
Questions 1.3 and 1.4 are based on the table below, which describes the process by
which a loaf of bread is made available to a consumer as a final good.
Farmer sells wheat to miller
Miller sells flour to baker
Baker sells bread to grocer
Grocer sells bread to consumer
1.3.
The total value of a loaf of bread is
a. R1,55
b. R2,25
c. R0,35
d. R5,90
e. R4,20
1.4.
The value added by the grocer equals
a. R2,25
b. R1,90
c. R1,05
d. R0,70
e. R0,35
Assignment: 2nd Semester 2012
Price (R) of a loaf of
bread
0,70
1,05
1,90
2,25
© IMM Graduate School of Marketing
MAC/ECO101
Page 3 of 9
1.5.
Net Domestic Product is equal to Gross Domestic Product net of
a.
b.
c.
d.
e.
inflation.
indirect taxes.
subsidies.
net factor payments.
depreciation/consumption of fixed capital.
1.6.
If dairy farming is subsidised, we would expect the value of a litre of milk to
be
a. equal to the price paid by the consumer for a litre of milk.
b. greater than the price paid by the consumer for a litre of milk.
c. less than the price paid by the consumer for a litre of milk.
d. lower because of the subsidy.
e. higher because of the subsidy.
1.7.
For a given year, Statistics South Africa found that nominal GDP calculated
at market prices was different from nominal GDP calculated by the income
method. Which of the following items would account for the difference?
a. Depreciation on capital equipment
b. Inflation
c. Interest on loans
d. Indirect taxes and subsidies
e. Net incomes from abroad
1.8.
If 2000 is the base year for real GDP calculations, we know for certain that
nominal GDP
a. is less than real GDP in 2000.
b. is greater than real GDP in 2000.
c. equals real GDP in 2000.
d. in 1999 will be greater than real GDP in 2000.
e. in 1999 will be less than real GDP in 2000.
1.9.
GDP at ________ prices will be greater than GDP at ________ prices
because of ________.
a. constant; current; inflation
b. current; constant; inflation
c. constant; current; depreciation
d. current; constant; depreciation
e. current; constant; deflation
1.10.
Since the R100 note was first introduced in South Africa, its value has
a. decreased in nominal terms and increased in real terms.
b. decreased in nominal terms and decreased in real terms.
c. increased in nominal terms and decreased in real terms.
d. increased in nominal terms and increased in real terms.
e. decreased in real terms, although its nominal value has remained
unchanged.
Assignment: 2nd Semester 2012
© IMM Graduate School of Marketing
MAC/ECO101
Page 4 of 9
1.11.
If South Africa’s GDP is greater than its GNI, then the income earned by
foreign owners of companies and foreign workers in South Africa is
________ the income earned by South Africans who have invested, or who
are working abroad.
a. greater than
b. added to
c. subtracted from
d. less than
e. deflated by
1.12.
To obtain GDP at market prices from Gross Domestic Expenditure, we must
a. subtract spending on exports and add spending on imports.
b. subtract spending on imports and add spending on exports.
c. subtract spending on intermediate goods and add spending on exports.
d. subtract spending on exports and add spending on intermediate goods.
e. subtract spending on net exports.
The table below shows a section of the national accounts for a small country in 2000.
Answer Questions 1.13 and 1.14 using the information provided in the table.
Consumption expenditure
Government expenditure
Depreciation
Exports
Imports
Gross Capital Formation (Investment)
10 500
3 000
500
1 200
1 000
2 200
1.13.
The value of Gross Domestic Expenditure is
a. 15 900.
b. 15 200.
c. 15 400.
d. 18 400.
e. 15 700.
1.14.
The value of Net Domestic Product is
a. 15 900.
b. 15 700.
c. 15 200.
d. 15 400.
e. 18 400.
1.15.
In a country with a population of 50 million people, there are 20 million
children under the age of 15 years, 16 million employed, 9 million
pensioners, 4 million unemployed and 1 million people who are physically
unable to work. The unemployment rate in this country equals
a. 8%.
b. 10%.
c. 13,3%.
d. 20%.
e. 25%.
Assignment: 2nd Semester 2012
© IMM Graduate School of Marketing
MAC/ECO101
Page 5 of 9
1.16.
A consumer’s real purchasing power refers to
a. the nominal income level of the consumer.
b. wage income earned through employment.
c. the maximum volume of goods and services that the consumer can buy.
d. nominal GDP per capita.
e. real GDP deflated by the price level.
1.17.
The inflation rate is measured by
a. the ratio of current year CPI to base year CPI.
b. the percentage change in the CPI from one year to the next.
c. the percentage change in GDP from one year to the next.
d. the ratio of current year CPI to the next year’s CPI.
e. the ratio of current year PPI to the next year’s PPI.
Refer to the table below that contains information about the Consumer Price Index in
Wonderland, in order to answer Questions 1.18, 1.19 and 1.20. The unit of currency
in Wonderland is the Wonder.
Year
1998
1999
2000
Consumer Price Index
100,0
112,1
120,8
1.18.
Between 1998 and 2000, the purchasing power of the consumer’s Wonder
a. decreased to 20,8 cents.
b. decreased to 120,8 cents.
c. decreased to 83 cents.
d. decreased to 93 cents.
e. increased to 120,8 cents.
1.19.
The inflation rate in 2000 was
a. 7,8%.
b. 8,7%.
c. 20,8%.
d. 17,2%.
e. 120,8%.
1.20.
Suppose that the inflation rate in 2001, calculated using the CPI, was found
to be 8%. What was the value of the CPI in 2001?
a. 128,8
b. 130,5
c. 129,7
d. 132,0
e. 124,0
Assignment: 2nd Semester 2012
© IMM Graduate School of Marketing
MAC/ECO101
Page 6 of 9
1.21.
The current account of the balance of payments records
a. all sales and purchases of goods and services as well as income flows
to and from the rest of the world.
b. the value of exports, but not imports.
c. the change in the country’s gold and foreign exchange reserves.
d. all purely financial flows in and out of the country.
e. all of the above.
1.22.
If the financial (or capital) account is in surplus, then
a. the value of imports exceeds the value of exports.
b. the value of exports exceeds the value of imports.
c. there will be a surplus on the overall balance of payments.
d. capital outflows exceed capital inflows.
e. there has been a net inflow of foreign capital into the country.
1.23.
Which one of the following steps is required to construct a Lorenz curve?
a. Find the cumulative age of the population.
b. Order the population from youngest to oldest.
c. Order the population from poorest to richest.
d. Divide the income of the richest group by the income of the poorest
group.
e. Divide the population into ten equal groups and calculate the average
income of these groups.
1.24.
Refer to the table below that describes the income distribution in a country.
Population
Poorest 20%
Next 20%
Next 20%
Next 20%
Richest 20%
Cumulative Percentage
Population
Income
20
5
40
10
60
25
80
60
100
100
In this country, the richest 40% of the population earns ________ of the
total income; whilst the poorest 40% of the population earns ________ of
the total income.
a. 40%; 15%
b. 40%; 10%
c. 60%; 15%
d. 75%; 10%
e. 75%; 15%
1.25.
The area between the Lorenz curve of a country and the diagonal of perfect
equality represents
a. the area of equality.
b. the area of inequality.
c. the Gini coefficient.
d. the quintile ratio.
e. the cumulative percentage of the population.
Assignment: 2nd Semester 2012
© IMM Graduate School of Marketing
MAC/ECO101
Page 7 of 9
QUESTION 2
[40]
At the ANC’s National General Council (NGC) held in September 2010 the National
Executive Committee (NEC) was requested to conduct research into the feasibility of
nationalising the country’s mining sector. Compile a well-researched essay that can
form part of the national debate on this important issue, using international
experience, theoretical and empirical research.
Your essay must have:
Introduction (+/- 50 words);
The case for or against nationalisation:
 Theoretical and empirical research and international experience (+/-350
words); and
 Analysis (+/-400 words)
Conclusion (+/- 100 words)
Your essay should be between 900 and 1000 words long. Each section must have a
heading.
Your essay will be marked according to the following marking matrix:
Section
Introduction
Economic
Theory
Excellent
The student
has a heading
for each
section. The
student
identifies the
correct issue
to be
discussed,
clearly states it
and then
focuses on it
throughout the
paper.
The student
has a heading
for the section.
The student
provides a
thorough
explanation of
the
appropriate
economic
theory needed
to discuss the
issue at hand.
Assignment: 2nd Semester 2012
Above
average
The student
identifies the
correct issue to
be discussed
and clearly
states it.
Average
Fail
The student
has a vague
sense of the
issue to be
discussed.
The student
provides no
clear problem
statement.
Weight
5%
The student
provides an
explanation of
the appropriate
economic
theory needed
to discuss the
issue at hand.
The student
provides an
explanation of
the
appropriate
theory needed
to discuss the
issue at hand.
The student is
unaware of the
appropriate
theory needed.
40%
© IMM Graduate School of Marketing
MAC/ECO101
Page 8 of 9
Analysis
Conclusion
FINAL MARK
The student
has a heading
for the section.
The student
makes
relevant
reference to
the economic
theory
presented to
provide an
opinion/
answer to the
issue at hand.
The student
has a heading
for the section.
The
conclusions
must follow
clearly from
the analysis.
The student
demonstrates
critical thought
by suggesting
further
implications of
the
conclusions
presented.
(90% +)
The student
makes
reference to
the economic
theory
presented to
provide an
opinion/
answer to the
issue at hand.
The student
provides an
opinion/
answer with
little reference
to the theory
presented.
There is no
application or
there is
incorrect
application of
the theory to
analyse the
problem.
The
conclusions
follow clearly
from the
analysis.
The
conclusions
follow weakly
from the
analysis.
There are no
conclusions or
the
conclusions
contradict the
results of
analysis.
40%
10%
(67-90%)
(50-66%)
PRESENTATION
(< 50%)
[10]
ASSIGNMENT TOTAL: 100
Assignment: 2nd Semester 2012
© IMM Graduate School of Marketing
MAC/ECO101
Page 9 of 9
ANSWER SHEET
(DETACH THE ANSWER SHEET AND INCLUDE IT WITH YOUR ASSIGNMENT)
ASSIGNMENT:
MACROECONOMICS (MAC)
ECONOMICS 1 (ECO101)
DATE:
21 AUGUST 2012
QUESTION:
ONE (1)
STUDENT
NUMBER:
S
QUESTION
NO.
SELECTED ANSWER
1.1
a
b
c
d
e
1.2
a
b
c
d
e
1.3
a
b
c
d
e
1.4
a
b
c
d
e
1.5
a
b
c
d
e
1.6
a
b
c
d
e
1.7
a
b
c
d
e
1.8
a
b
c
d
e
1.9
a
b
c
d
e
1.10
a
b
c
d
e
1.11
a
b
c
d
e
1.12
a
b
c
d
e
1.13
a
b
c
d
e
1.14
a
b
c
d
e
1.15
a
b
c
d
e
1.16
a
b
c
d
e
1.17
a
b
c
d
e
1.18
a
b
c
d
e
1.19
a
b
c
d
e
1.20
a
b
c
d
e
1.21
a
b
c
d
e
1.22
a
b
c
d
e
1.23
a
b
c
d
e
1.24
a
b
c
d
e
1.25
a
b
c
d
e
Assignment: 2nd Semester 2012
© IMM Graduate School of Marketing
MAC/ECO101