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Ecs1601 Assignment 2 Semester 2 2023
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UNISA 2023 ECS1601-23-S2 Online assessments Assessment 2QUIZ
Started on 31.: 26924/2 ,
State Finished
Completed on 31.: 26924/2 ,
Time taken 435 20
Marks
out of 100.00
Question 1
Complete
Mark 1.00 out of 1.00
One of the following is an instrument of trade policy.
a. foreign exchange reserves
b. balance of payments
c. import tariff
d. currency depreciation
e. gross domestic product
An import tariff is a tax or duty levied on goods imported into the country. It is
meant to protect local industries from foreign competition by increasing the
nal cost of imported goods, so that consumers support local businesses
selling goods they would otherwise buy from foreign countries.
The gross domestic product is the total value of all nal goods produced within
the borders of a country, in a year. It is a measure of macroeconomic
performance and not a trade policy instrument.
A currency depreciation is when the price of foreign currency increases in terms
of domestic currency. For example, when the rand/dollar exchange rate
increases from R15,00/$ to R16,00/$. This is a movement in the price of
currency in the foreign exchange market and not a trade policy instrument. In
addition to this, foreign exchange reserves are recorded in the balance of
payments and are not an instrument of trade policy.
,Question 2
Complete
Mark 1.00 out of 1.00
Suppose that the Euro/US Dollar exchange rate changes from 1,3 Euro per
Dollar to 1,1 Euros per Dollar. Then
a. the euro has appreciated against the dollar.
b. the dollar has strengthened against the euro.
c. the euro has weakened against the dollar.
d. the dollar has appreciated against the euro.
e. the price of the dollar has become expensive in terms of the euro.
Before the change in the exchange rate between the Euro and the Dollar, 1,3 Euro
was required to exchange for 1 Dollar. After the change in the exchange lessens,
only 1,1 Euros is required to exchange for 1 Dollar. The Euro has,
therefore, gained in strength and appreciated against the dollar. Refer to pages
71 –76 of the prescribed textbook, as well as Figures 4-3 and Tables 4-1 and 4-
2.
Question 3
Complete
Mark 0.00 out of 1.00
Which of the following statements regarding the theory of comparative
advantage is correct?
a. Each country will specialise in and export the good for which it has an
absolute advantage.
b. Each country will specialise in and export the good for which it has a
comparative advantage.
c. Trade between two countries will only take place if their opportunity
costs of production are equal.
d. None of the above.
Countries should specialise in the production of and export the good for which it
has a comparative advantage. Absolute advantage is not a prerequisite for trade
between two countries. In addition, if the opportunity costs between both
countries is the same, there is no basis for trade. Differences in opportunity
costs of production between two countries are a necessary condition for gains
from trade.
,Question 4
Complete
Mark 1.00 out of 1.00
Suppose that Sandile, a South African trader, imports goods from China and
sells them in South Africa. Suppose also that the Rand appreciates against the
Yuan. How would this impact Sandile’s business?
a. The demand for Chinese goods by Sandile’s business will decrease
because imports from China become more expensive when the Rand
appreciates.
b. The demand for Chinese goods by Sandile’s business will decrease
because imports from China become more expensive when the Yuan
depreciates.
c. The price of goods that Sandile’s business imports will decrease in
terms of the Yuan.
d. The price of goods that Sandile’s business imports will decrease in
terms of the Rand.
The price of goods that Sandile’s business imports will decrease in terms of
rand.
Question 5
Complete
Mark 1.00 out of 1.00
The balance of payments is a record of the transactions of each country with its
trading partners. Use the following passage to answer the question:
Source: Quartz Africa, https://qz.com/africa/2122487/african-governments-
now-want-to-tax-your-net ix-and-chill/ (accessed 10 May 2022)
Which of the following is correct?
a. The streaming services will be recorded in the nance account as an
in ow.
b. The streaming services will be recorded in the current account as an
out ow.
c. The streaming services will be recorded in the nancial account as an
in ow.
d. The streaming services will be recorded in the current account as an
in ow.
The balance of payments records the transactions that a country conducts with
the rest of the world. Goods and services are recorded in the current account,
while nancial transactions such as trading in shares are recorded in the
nancial account. See Section 5.5 of the prescribed book.
, Question 6
Complete
Mark 1.00 out of 1.00
Zandile orders a pair of leather boots from France at a price of €275. The
Rand/Euro exchange rate is R16,93/€1. Upon arrival in South Africa, an import
tax of 15% is levied on the imported boots. What is the total value of the item
imported in South African Rand?
a. R4 655,75
b. R698,36
c. R5 345,11
d. R6 133,47
First, multiply the value of the boots in Euros by the exchange rate of R16,93/€1:
€275,00 × 16,93 = R4 655,75
Then calculate the 15% import tax and change it to a decimal: 15/100 = 0,15 R4
655,75 × 0,15 = R698,36
Finally, add the Rand value of the leather boots and the import tax to calculate
the total Rand value: R4 655,75 + R698,36 = R5 345,11
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