Calculators/Sakrekenaars: Yes

Requirements for this paper/Benodigdhede vir hierdie vraestel: Other resources/Ander hulpmiddels:
Answer scripts/ Multi-choice cards (A5)/
Antwoordskrifte: X Multikeusekaarte (A5): x

X
Attendance slips (Fill-in paper)/ Multi-choice cards (A4)/
Presensiestrokies (Invulvraestel): Multikeusekaarte (A4):
Scrap paper/ Graph paper/
Rofwerkpapier: Grafiekpapier:

Type of assessment/ Tipe Semester test Qualification/ BCom; BSc

assessering: Kwalifikasie:

Module code/ ECON122 Duration/ 90 minutes

Modulekode: Tydsduur: 90 minute
Module description/ Introduction to macroeconomics Max/ Maks: 50
Modulebeskrywing:
Examiner(s)/ Dr Anton van Wyk Date/ Datum: 05/10/2022
Eksaminator(e): Mr Jacques de Jongh
Ms Confidence Nthebe
Internal/Interne Ms Precious Mncayi Time/ Tyd: 08:00
moderator(s):
External moderator(s)/N/A
Eksterne moderator(s):

Submission of answer scripts/Inhandiging van antwoordskrifte: Ordinary/Gewoon

INSTRUCTIONS

• Answer all the questions.

• The ceteris paribus condition applies to all questions.

• Show all calculations and formulae.

• Round all final answers to two decimal places (no rounding in calculation steps).

• Make use of the multiple-choice cards to answer Section A. Also, ensure that you familiarise
yourself with the instructions on the multiple-choice cards.

• It is in your best interest to write neatly and legibly.

• Write your name, surname, and student number on the script.

• Ensure that you hand in your multiple-choice card with your answer sheet.

ECON122 – Semester test 1/8

 SECTION A [15 marks]

Question 1 (1)

Which statement is true regarding money?

A. Money is a factor of production

B. Money equals prosperity and wealth.

C. Bank cards are plastic money.

D. Money is a medium of exchange

Question 2 (1)

Which statement of the following is wrong regarding the Reserve Bank? The function of the South African
Reserve Bank is to:

A. Protect the value of the South African Currency

B. Issue Banknotes & Coins

C. Serve as the primary employment creation agency.

D. Serve as the Custodian of South Africa’s Gold and Foreign Reserves

Question 3 (1)

Which is not a monetary policy instrument?

A. Accommodation Policy

B. Open-market operations

C. Credit ceilings and deposit rate control

D. Tax rate manipulation

ECON122 – Semester test 2/8

 Question 4 (1)
To apply expansionary monetary policy the SARB needs to

A. Increase the cost of credit.

B. Decrease the money supply.

C. Buy bonds in the open market.

D. Create a capital market surplus.

Question 5 (1)

When interest rates go up, the demand for money:

A. Decreases.

B. Increases.

C. Stays unchanged.

D. Depends on the liquidity trap.

Question 6 (1)

Which one of the following statements are correct? The function of money is: A.

To act as a source of income.

B. To be divisible and durable.

C. wealth

D. a unit of account.

Question 7 (1)
A justification for government intervention in the economy arises from the fact that market systems usually
produce ________ outcomes, but they do not necessarily produce ________ outcomes.

A. efficient; equitable

B. equitable; efficient

C. efficient; profitable

D. profitable; equitable

Question 8 (1)
Fiscal policy can be best defined as:

ECON122 – Semester test 3/8

A. government’s decisions regarding the number of workers it employs.

B. government’s decisions regarding the level and composition of spending.

C. Policy with regard to the level and composition of government spending, taxation and borrowing.

D. the borrowing by government on international and domestic capital markets.

Question 9 (1)
When the government uses its overdraft facilities at the central bank, it ___________ the quantity of money
in the economy. This is called ___________________ financing.

A. increases; deflationary

B. decreases; inflationary

C. decreases; deflationary

D. increases; inflationary

Question 10 (1)
Which of the following is least likely to be associated with market failure, and is consequently least likely
to require any form of state regulation or intervention?

A. Hake fishing off the west coast of South Africa.

B. The provision of education services in schools.

C. The market for fast foods.

D. The provision of lifeguards on Durban’s beaches.

Question 11 (1)

Which of the following would be classed as an expansionary fiscal policy? A.

An increase in the quantity of money.

B. A reduction in the number of goods exempted from VAT.

C. An increase in government taxation.

D. An increase in government expenditure

Question 12 (1)

ECON122 – Semester test 4/8

Which of the following is not a legitimate area of intervention by government in a mixed economy? A.

Regulation of the pricing behaviour of monopoly industries.

Regulation of price increases that result from changes in patterns of demand and supply in B.
competitive markets.

C. Stabilisation of the economy during periods of cyclical instability.

D. Redistribution of purchasing power via progressive taxation and transfers.

Question 13 (1)

Which of the following statements about inflation is true? Inflation refers to A.

a sudden and self-contained increase in prices.

B. “too much money chasing too few goods”.

C. a sustained increase in the general price level

D. an increase in the purchasing power of money.

Question 14 (1)
If the consumer price index at the end of 2011 was 100 and at the end of 2012 was 120, then the rate of
inflation for 2012 was

A. 25%.

B. 20%

C. 16.66%

D. 1.5%

Question 15 (1)
Which one of the following statements is correct. Inflation tends to: A.

benefit lenders at the expense of borrowers.

B. benefit taxpayers at the expense of the government.

C. benefit the young at the expense of the elderly

D. benefit creditors at the expense of debtors.

SECTION B [15 marks]

ECON122 – Semester test 5/8

QUESTION 1 [5]
1.1 Name and explain three major roles of the Reserve Bank in the South African economy. (3)

1.2 Draw the demand for money curve and clearly indicate the components of the demand for (2) money
by transactions and speculation motives.

QUESTION 2 [3]
2.1 Draw a graph that illustrates an increase in the money supply according to the traditional (3) approach
and indicate what effect that will have on the interest rates. (Name your curves and axes clearly
and indicate the movement of the money supply and interest rates clearly).

QUESTION 3 [4]

3.1 Differentiate between progressive and proportional tax and provide an example of each. (2)

(2)
3.2 Give two valid reasons for government intervention in the South African economy.

QUESTION 4 [3]
4.1 Draw a graph indicating demand-pull inflation and describe the concept in full referring to
(3) the graph drawn

SECTION C [20 marks]

QUESTION 1 [6]
Suppose Muhammad’s monthly income is R26 700 during the 2022 tax year. Given the following tax bracket,
answer the questions that follow.

Taxable income (R) Rates of tax (R)

1 – 226,000 18% of taxable income

226,001 – 353,100 40,680 + 26% of taxable income above 226,000

353,101 – 488,700 73,726 + 31% of taxable income above 353,100

488,701 – 641,400 115,762 + 36% of taxable income above 488,700

ECON122 – Semester test 6/8

1.1 How much tax will Muhammad pay to SARS? (2)

1.2 What is Muhammad’s average tax rate? (2)

1.3 Suppose Muhammad’s monthly income is increased to R40,723, resulting in him paying (2)
R115,754.56 tax. How would you classify this type of tax? Motivate your answer.

QUESTION 2 [3]
2.1 With the use of the information in the table below, calculate the inflation rate for 2022 (3) with the use of
the BBP deflator.

Year Nominal GDP Real GDP

2018 350 100 380 500

2019 354 211 382 567

2020 358 254 386 569

2021 364 225 388 431

2022 397 651 402 522

QUESTION 3 [5]

3.1 Determine the comprehensive M3 money supply of Germany when there is R10 mil. worth of (3)
coins and banknotes in circulation, R25 mil. immediate demand deposits at banks, R125
mil. short and medium-term deposits, as well as R290 mil. long-term deposits. Show the
equations that you used and your calculations.

3.2 Using your answer in 3.1. Imagine a very clever computer hacker who managed to steal R50 mil. (2)
of the country’s M2 money supply. How much will the total M3 money supply
now be?

QUESTION 4 [6]

Use the information in the table and calculate the following:

ECON122 – Semester test 7/8

 CPI excl.
CPI excl. CPI
food and
CPI CPI food and CPI excl.
CPI for non-
for all excl. non- excl. fuel
services alcoholic
goods housing alcoholic fuel and
beverages
beverages energy
and fuel

Jun 2020 111.6 118.1 114.6 114.8 115.4 115.4 115.1

Jul 2020 113.8 119.0 116.0 116.6 116.4 116.5 115.8

Jun 2021 119.5 121.5 121.1 120.0 119.9 119.3 119.5

Jul 2021 121.4 122.2 121.7 121.5 121.2 120.7 120.0

4.1 The inflation rate for all products in July 2021, compared to July 2020. (2)

4.2 The core inflation rate (without food and fuel) in June 2021, compared to June 2020. (2)

4.3 The inflation rate for services July vs June 2021. (2)

Total: 50 marks

ECON122 – Semester test 8/8