19; 20; 21 2021

MODULE NAME: MODULE CODE:

ECONOMICS 1B PMAC6112/d/e/f/p/w
ECONOMICS B (MACRO) ECMS6212/d

ASSESSMENT TYPE: TAKE-HOME ASSESSMENT (PAPER ONLY)

TOTAL MARK ALLOCATION: 120 MARKS
TOTAL TIME: This assessment should take you 2 Hours to complete, however
you have 21 Hours (midnight to 9PM on the same day) to
submit. This additional time has been allocated to allow for the
download, completion and upload of your submission.
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. Marks will be awarded for the quality of your paraphrasing.
7. This is an open-book assessment.
8. Assessments must be typed unless otherwise specified.
9. Ensure that you save a copy of your responses.
9.1 Complete your responses in a Word document.
9.2 The document name must be your name.student number.Module Code.
9.3 Once you have completed the assessment, upload your document under the
submission link in the correct module in Learn.
Additional instructions:
• Calculators are allowed.
• 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.
• This assessment has Three Sections. You are required to answer All of these sections.
• Answer All Questions.

© The Independent Institute of Education (Pty) Ltd 2021

Page 1 of 11
19; 20; 21 2021

• Show all calculations, where applicable (marks may be awarded for this).

If you are using a Word Document in specialised numeracy modules:

o Use the following to reflect your calculations:
o Multiple x – small letter x or *.
o Division / forward slash.
o Addition and subtraction + and -.
o Square roots and equations – using the function insert - equation.
o Tables – using the function insert – table.
o Working with tables – use merge and split cell functions through right click function.
o Fitting tables to pages – Autofit to window/content through right click function.
o Layout of table – Section breaks and landscape orientation through layout – breaks and
layout orientation in the ribbon.
o If you are not familiar with all the functions in word it is recommended that you rather do a
hardcopy if possible.
o The document name must be your name.student number.Module Code.
o Once you have completed the assessment, upload your document under the submission link
in the correct module in Learn.

Instructions for assessments including drawings in design qualifications:

o Drawings must be done on A4 paper, and your name and student number must be included
on all sheets.
o 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.
o Marks will be lost for poor planning and layout.
o Complete each of the questions on a separate page. Make use of various pencils, erasers
and a viewfinder only.
o Draw all the required drawings on drawing paper as required.
o You may then scan or take a photo of the drawing for online submission.

© The Independent Institute of Education (Pty) Ltd 2021

Page 2 of 11
19; 20; 21 2021

Referencing Rubric

Providing evidence based on valid and referenced academic sources Markers are required to provide feedback to students by indicating
is a fundamental educational principle and the cornerstone of high- (circling/underlining) the information that best describes the
quality academic work. Hence, The IIE considers it essential to student’s work.
develop the referencing skills of our students in our commitment to
achieve high academic standards. Part of achieving these high Minor technical referencing errors: 5% deduction from the
standards is referencing in a way that is consistent, technically overall percentage – the student’s work contains five or more
correct and congruent. This is not plagiarism, which is handled errors listed in the minor errors column in the table below.
differently.
Major technical referencing errors: 10% deduction from the
Poor quality formatting in your referencing will result in a penalty of overall percentage – the student’s work contains five or more
a maximum of ten percent being deducted from the percentage errors listed in the major errors column in the table below.
awarded, according to the following guidelines. Please note,
however, that evidence of plagiarism in the form of copied or If both minor and major errors are indicated, then 10% only (and
uncited work (not referenced), absent reference lists, or not 5% or 15%) is deducted from the overall percentage. The
exceptionally poor referencing, may result in action being taken in examples provided below are not exhaustive but are provided to
accordance with The IIE’s Intellectual Integrity Policy (0023). illustrate the error

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

Overall Feedback about the consistency, technical correctness and congruence between in-text referencing and bibliography:
........................................................................................................................................................................................................................................................................................

........................................................................................................................................................................................................................................................................................ .

© The Independent Institute of Education (Pty) Ltd 2021

Page 3 of 11
19; 20; 21 2021

Question 1 (Marks: 40)

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 number of the correct
answer.

Q.1.1 In the circular flow of income and spending: (2)

(1) Investment results in a decrease in the volume of the income flow;
(2) Savings result in a decrease in the volume of the income flow;
(3) Taxes result in an increase in the volume of the income flow;
(4) Imports result in an increase in the volume of the income flow.

Q.1.2 Money as a medium of exchange consists of: (2)

(1) Demand deposits;
(2) Debit cards;
(3) Credit cards;
(4) Cheques.

Q.1.3 An increase in the budget deficit is the result of: (2)

(1) Expansionary monetary policy;
(2) Contractionary monetary policy;
(3) Expansionary fiscal policy;
(4) Contractionary fiscal policy.

Q.1.4 Company tax is a: (2)

(1) Progressive, direct tax;
(2) Progressive, indirect tax;
(3) Proportional direct tax;
(4) Regressive indirect tax.

Q.1.5 In the base year, a country produced 50 units of output at a price of R6,00 each (2)
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?
(1) 5%;

© The Independent Institute of Education (Pty) Ltd 2021

Page 4 of 11
19; 20; 21 2021

(2) 10%;
(3) 20%;
(4) 15%.

Q.1.6 GDP at ___________ prices will usually be greater than GDP at _____________ (2)
prices because of __________________.
(1) Constant; current; inflation;
(2) Current; constant; inflation;
(3) Constant; current; depreciation;
(4) Current; constant; depreciation.

Q.1.7 As a result of more Europeans visiting South Africa, we can expect, ceteris (2)
paribus:
(1) An appreciation of the rand relative to the euro;
(2) A depreciation of the rand relative to the euro;
(3) An appreciation of the euro relative to the rand;
(4) That it will cost South Africans more to visit Europe.
Q.1.8 and Q.1.9 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.

Price (R) of a loaf of bread

Farmer sells wheat to miller 5,00
Miller sells flour to baker 6,00
Baker sells bread to grocer 10,00
Grocer sells bread to consumer 12,00

Q.1.8 The total value of a loaf of bread is: (2)

(1) R7,00;
(2) R12,00;
(3) R33,00;
(4) R10,00.

© The Independent Institute of Education (Pty) Ltd 2021

Page 5 of 11
19; 20; 21 2021

Q.1.9 The value added by the grocer equals: (2)

(1) R12,00;
(2) R10,00;
(3) R5,00;
(4) R2,00.

Q.1.10 When the rand depreciates against the dollar: (2)

(1) The balance on the current account of the balance of payments
worsens;
(2) The South African Reserve Bank can influence the exchange rate by
raising interest rates to attract foreign capital and thus strengthen the
value of the rand;
(3) The South African Reserve Bank can buy dollars to strengthen the
value of the rand;
(4) The South African Reserve Bank can take steps to limit the supply of
dollars and in this way strengthen the value of the rand relative to the
dollar.

Q.1.11 A surplus on the current account of the balance of payments indicates that: (2)
(1) Financial inflows are less than financial outflows;
(2) Imports are greater than exports;
(3) Financial inflows are greater than financial outflows;
(4) Exports are greater than imports.

Q.1.12 Which one of the following statements about the simple Keynesian (2)
macroeconomic model is correct?
(1) Supply creates its own demand;
(2) Equilibrium can occur at any level of income, not only the full-
employment level;
(3) The model can be used to study inflation;
(4) Wages and prices are variable.

© The Independent Institute of Education (Pty) Ltd 2021

Page 6 of 11
19; 20; 21 2021

Q.1.13 An increase in the marginal propensity to consume: (2)

(1) Shift the aggregate spending function (A) upwards;
(2) Shifts the aggregate spending function (A) downwards;
(3) Increases the slope of the aggregate spending function (A);
(4) Decreases the slope of the aggregate spending function.

Q.1.14 If the inflation rate is 6% and Susan receives a 6% increase in income, then, over (2)
the year, Susan’s:
(1) Real and nominal income both remain unchanged;
(2) Real and nominal income both rise;
(3) Real income rises but nominal income remains unchanged;
(4) Nominal income rises but real income remains unchanged.

Q.1.15 Value Added Tax (VAT) is a: (2)

(1) Progressive, direct tax;
(2) Progressive, indirect tax;
(3) Proportional direct tax;
(4) Regressive indirect tax.

Q.1.16 Japan has a comparative advantage over Germany in the production of cars if it: (2)
(1) Is able to produce cars at a faster rate than Germany;
(2) Produces cars at a lower opportunity cost than Germany;
(3) Has the absolute advantage in car production;
(4) Exports more cars than Germany.

Q.1.17 Which of the following is NOT a justification for government involvement in the (2)
economy?
(1) To prevent excessive monopoly power by regulating monopolistic
industries;
(2) To ensure that common property resources are not over exploited;
(3) To provide public goods as the private sector is usually not willing to
provide these;

© The Independent Institute of Education (Pty) Ltd 2021

Page 7 of 11
19; 20; 21 2021

(4) To regulate demand and supply in the macro economy.

Q.1.18 The implementation lag is ___________ for monetary policy and _____________ (2)
for fiscal policy.
(1) Extremely short; long;
(2) Long; extremely short;
(3) Long; long;
(4) Long; short.

Q.1.19 Creditors and debtors tend to lose during an inflationary period since: (2)
(1) The nominal interest rate on their credit tends to fall;
(2) The real value of their credit tends to decrease;
(3) Debtors pay more in real terms;
(4) The real interest rate on their credit remains constant.

Q.1.20 Although government intervention in an economy is sometimes justified, (2)

governments may still fail when they intervene. Government failure occurs
because:
(1) Politicians often make decisions that win votes in the short term
rather than making decisions that maximise long term economic
prosperity;
(2) Government organisations are largely bureaucratic and, as such are
not subject to competition or under pressure to maximise profits;
(3) Both statements (1) and (2) are correct;
(4) Neither statement a nor b is correct.

© The Independent Institute of Education (Pty) Ltd 2021

Page 8 of 11
19; 20; 21 2021

Section B (Marks: 40)

Answer all the questions

Question 1 (Marks: 10)

The following information is provided about an open economy with a government. Use the
information to answer the questions that follow:

Autonomous consumption = R100m

Investment spending = R300m
Government spending = R200 million
Exports = R150 million
Autonomous imports = R100 million
Marginal propensity to consume =2/3
Tax rate = 1/10
Marginal propensity to import = 1/10
Yf = R2 150 million

Q.1.1 Calculate the level of autonomous spending in this economy. (2)

Q.1.2 Calculate the size of the multiplier. (3)

Q.1.3 Calculate the equilibrium level of income. (2)

Q.1.4 Calculate the change in government spending required to reach full employment (3)
in the economy.

Question 2 (Marks: 10)

Q.2.1 What are the main functions of the South African Reserve Bank? (4)

Q.2.2 Distinguish between active balances and passive balances and mention the main (6)
determinant of each.

© The Independent Institute of Education (Pty) Ltd 2021

Page 9 of 11
19; 20; 21 2021

Question 3 (Marks: 10)

Q.3.1 Although economic growth is typically measured by calculating the rate of change (4)
in real GDP, there are a few problems associated with the use of GDP as a
measure of economic growth.

Identify these problems.

Q.3.2 Economic growth can originate from the demand side or from the supply side of (6)
the economy. Discuss the sources of economic growth on the demand side.

Question 4 (Marks: 10)

Q.4.1 The South African Reserve Bank follows a policy of inflation targeting. (5)
Outline the key features of this policy.

Q.4.2 Explain how the South African Reserve Bank can use accommodation policy to (5)
keep inflation under control, and, in this way meet its inflation targets.

Section C (Marks: 40)

Answer all the questions

Question 1 (Marks: 15)

Q.1.1 Explain, using the AD-AS model, the effect of an increase in investment in the (10)
macroeconomy on the equilibrium price level and the equilibrium level of output.

Q.1.2 Can demand management policies be used to combat stagflation? Explain your (2)
answer.

Q.1.3 Identify three ways in which aggregate supply could decrease in an economy. (3)

© The Independent Institute of Education (Pty) Ltd 2021

Page 10 of 11
19; 20; 21 2021

Question 2 (Marks: 10)

Explain, with the aid of a graph, the demand-pull inflation as a cause of inflation.

(Note: Five marks for the graph and five marks for the explanation)
(Hint: Outline the factors that cause the change in the AD curve)

Question 3 (Marks: 15)

Q.3.1 Briefly explain the four different types of unemployment. (8)

Q.3.2 Discuss the ways in which unemployment can be reduced on the demand side of (7)
the economy.

END OF PAPER

© The Independent Institute of Education (Pty) Ltd 2021

Page 11 of 11