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ECS 1601 QUIZ STUDY UNIT 4
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ECS 1601 QUIZ STUDY UNIT 4
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ECS 1601Study Unit 4 Quiz
Multiple Choice Questions (MCQ’s)
1. An increase in the demand for US Dollars will:
[1] Cause the Dollar to depreciate and the Rand to appreciate
[2] Cause the demand curve for Dollars to shift to the left and the Rand to depreciate
[3] Cause the demand curve for Dollars to shift to the right and the Dollar to appreciate
[4] Cause the demand curve for Dollars to shift to the right and the Rand to appreciate
2. The labour units needed to produce cars and TVs in South African and Botswana are as
follows:
South Africa Botswana
Cars 3 8
TVs 2 1
[1] Botswana has an absolute advantage in cars
[2] South Africa has a comparative advantage in cars
[3] South Africa has an absolute advantage in TV’s
[4] All of the above
3. In a floating currency system, policy makers have the following options with regard to
exchange rate policy:
[1] Depreciate the Rand by changing its price
[2] Increase the interest rate in an attempt to prevent a depreciation of the Rand
[3] Sell exports at a cheaper price in order to appreciate the Rand
[4] Offer the Rand at a higher price on the foreign exchange market to cause it to
appreciate
4. The Rand/Dollar equilibrium exchange rate is:
[1] Where the Rand is equal to the Dollar (ZAR1 = US$1)
[2] Where the quantity of Dollars demanded is equal to the quantity of Dollars supplied
[3] Where an increase in the supply of Dollars will be equal to an increase in the supply of
Rands
[4] None of the above statements are correct
5. South Africa’s gold and foreign reserves:
[1] Act as a current account that the government holds with the SARB
[2] Are often hard to determine as we do not know how much gold can still be mined in
South Africa
[3] Will never run out, as it is provided by the natural resources of the country
[4] Are required to prevent large fluctuations in exchange rates between the Rand and
foreign currencies
Quiz will be discussed on your e-tutor site from Monday 3 March Page 1
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