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ECS2603 ASSESSMENT 4 OF SEM 2 OF 2024 EXPECTED ANSWERS
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THIS DOCUMENT CONTAINS ECS2603 ASSESSMENT 4 OF SEM 2 OF 2024 EXPECTED ANSWERS. USING IT CORRECTLY AS A GUIDE WILL HELP YOU SCORE ABOVE 75%
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The questions in this part are based on Exchange Rates in FAC,MAC,ECS,DSC,TA
the SARB Quarterly Bulletin, March 2022, S-112. X,FIN,INV,QMI,BNU,
STA tutoring
In 2021 the rand appreciated against the Brazilian Real, Chinese
Yuan, EU Euro, UK Pound and US Dollar.
True
False
In June 2021 the rand/Japanese yen was 0.126 cents (3
decimal places)
In 2020 the Rand/Euro exchange rate was 18.77 cents (2
decimal places)
In May 2021 the South African rand _____ against the Euro and
compared to April 2021.
appreciated
depreciated
Question 50
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If a Big Mac costs R37.06 in South Africa and $6.14 in the US, then purchasing
power parity requires the rand/dollar exchange rate to be R (2 decimal places).
Answer: 6.04
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,Question 45
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It is only producers’ prices that can be used to calculate the effective foreign
price ratio.
True
False
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Question 46
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The Big Mac index shows what exchange rates ought to be to equate the
domestic price of a Big Mac with its price in other countries.
True
False
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Question 47
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An increase in the inflation rate in South Africa relative to the inflation rate in the
US will require that the rand must appreciate against the dollar to keep the
relative purchasing power the same.
True
False
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Question 48
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,Purchasing power parity between South Africa and the USA is measured by the
amount of rands which gives the holder the same purchasing power as $1.
True
False
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, Question 41
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If Country A's inflation rate is higher than Country B's inflation rate, the
competitiveness of Country A's exports to Country B can be maintained by
allowing Country A's currency to depreciate against Country B's currency by the
difference (or margin) between the two inflation rates.
True
False
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Question 42
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A real exchange rate is the rate that you actually have to pay when purchasing a
foreign currency at the local branch of your bank.
True
False
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Question 43
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If Country A's inflation rate is higher than Country B's inflation rate, Country A's
exports to Country B will become more competitive, ceteris paribus.
True
False
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Question 44
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