Ecs1601 Week 2 Study Guide
ECS1601/202/2/2011
STREPIESKODE BAR CODE
Department of ECONOMICS
Economics IB (ECS1601) Tutorial letter 202/2011 (Second semester)
1.
Solutions to Assignments 03 and 04.
UNISA
2
Dear Student The purpose of this tutorial letter is to provide you with the correct answers to the assignments. 1. The solutions to Assignments 03 and 04. Assignment 03 - Unique number 810132 Explanations 3.1 The correct alternative is (3)
According to the assumptions of the simple Keynesian model, the economy only consists of the two sectors; households and firms. See section 18.2 of the text book. 3.2 [1] The correct alternative is (2) Incorrect. In macroeconomic theory, total spending is not always equal to total production. Total spending …show more content…
Incorrect. This is an example of frictional unemployment. Incorrect. This is an example of cyclical unemployment. Incorrect. This is an example of seasonal unemployment. Correct.
4.14 The correct alternative is (3) [1] Incorrect. An increase in taxes reduces disposable income and consumption. Hence aggregate spending and aggregate demand will fall, resulting in a decrease in the demand for labour. Incorrect. An increase in the interest rate reduces investment spending; decreasing aggregate spending and aggregate demand, resulting in a decrease in the demand for labour. Correct. Increased demand for exports will increase aggregate demand and production. Thus stimulating the demand for labour. Incorrect. An increase in the size of the population affects the supply of labour.
[2]
[3] …show more content…
b. Correct. Correct. Capital deepening is when the growth in stock of capital (20%) is greater than the growth in the number of workers (18%). Capital widening occurs when the capital stock is increased to accommodate an increasing labour force. That is, the stock of capital increases by the same percentage (22%) as the increase in the labour force. Capital intensity is when the growth the growth in stock of capital is greater than the growth in the number of workers. In 2006 the capital intensity decreased (the growth in the labour force (20%) exceeded the growth in stock of capital
STREPIESKODE BAR CODE
Department of ECONOMICS
Economics IB (ECS1601) Tutorial letter 202/2011 (Second semester)
1.
Solutions to Assignments 03 and 04.
UNISA
2
Dear Student The purpose of this tutorial letter is to provide you with the correct answers to the assignments. 1. The solutions to Assignments 03 and 04. Assignment 03 - Unique number 810132 Explanations 3.1 The correct alternative is (3)
According to the assumptions of the simple Keynesian model, the economy only consists of the two sectors; households and firms. See section 18.2 of the text book. 3.2 [1] The correct alternative is (2) Incorrect. In macroeconomic theory, total spending is not always equal to total production. Total spending …show more content…
Incorrect. This is an example of frictional unemployment. Incorrect. This is an example of cyclical unemployment. Incorrect. This is an example of seasonal unemployment. Correct.
4.14 The correct alternative is (3) [1] Incorrect. An increase in taxes reduces disposable income and consumption. Hence aggregate spending and aggregate demand will fall, resulting in a decrease in the demand for labour. Incorrect. An increase in the interest rate reduces investment spending; decreasing aggregate spending and aggregate demand, resulting in a decrease in the demand for labour. Correct. Increased demand for exports will increase aggregate demand and production. Thus stimulating the demand for labour. Incorrect. An increase in the size of the population affects the supply of labour.
[2]
[3] …show more content…
b. Correct. Correct. Capital deepening is when the growth in stock of capital (20%) is greater than the growth in the number of workers (18%). Capital widening occurs when the capital stock is increased to accommodate an increasing labour force. That is, the stock of capital increases by the same percentage (22%) as the increase in the labour force. Capital intensity is when the growth the growth in stock of capital is greater than the growth in the number of workers. In 2006 the capital intensity decreased (the growth in the labour force (20%) exceeded the growth in stock of capital