Exam (elaborations)
ECS3703 EXAM PACK 2023
- Course
- Institution
ECS3703 EXAM PACK 2023
[Show more]
Seller
Follow
reinah44
Reviews received
Content preview
ECS3703EXAM PACK
2023
,
,
, SECTION A
You must answer all question in this section.
QUESTION 1
(a) Discuss the financial account of the South African Balance of Payment (15)
The financial account is part of a South Africa's balance of payments. It shows the
change in South Africa-owned assets abroad and foreign-owned assets in South Africa.
The financial account is a measurement of increases or decreases in international
ownership of assets. The owners can be individuals, businesses, the government, or its
central bank. The assets include direct investments, securities like stocks and bonds,
and commodities such as gold and hard currency.
The financial account of South Africa is subdivided into direct investment, portfolio
investment and other investment. The financial account is a large component of the
balance of payments. It adds to the balance of payments when it's positive, or when
foreign money is flowing into the South Africa to purchase assets. It subtracts from
the balance of payments when domestic money is flowing out of the South Africa to
purchase foreign assets.
If the financial account offsets the trade deficit, it means the South Africa is selling off
its assets to pay for purchases of foreign goods and services. That's like selling off
your land to pay for groceries. You would be better off investing in that land by
farming it to grow your food. It’s not sustainable to sell off all your assets for
something consumable.
(i) Direct investment foreign investment in South Africa and investments abroad by
South Africans. It is productive investment thus it is investment in plant, equipment,
machinery or factories, i.e. investment that will help with the process of wealth
creation. Direct investment is investment undertaken by an entity resident in one
economy in an enterprise resident in another economy. The purpose of the investment
is to obtain or sustain a lasting interest in the enterprise and exercise a significant
degree of influence in its management.
1
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller reinah44. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.50. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
82215 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now