ECS3703/101/3/2018
Tutorial Letter 101/3/2018
International Finance
ECS3703
Semester 1 and 2
Department of Economics
IMPORTANT INFORMATION
This tutorial letter contains important information about your module.
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CONTENTS
Page 1 INTRODUCTION……………………................................................................................................. 4
2 PURPOSE AND OUTCOMES ....................................................................................................... 4
2.1 Purpose ...................................................................................................................................... 4
2.2 Outcomes ................................................................................................................................... 4
3 LECTURERS AND CONTACT DETAILS........................................................................................ 5
3.1 Lecturers..................................................................................................................................... 5
3.2 Department ................................................................................................................................. 5
3.3 University.................................................................................................................................... 5
4 RESOURCES............................................................................................................................. 6
4.1 Prescribed books ........................................................................................................................ 6
4.2 Recommended books ................................................................................................................. 6
4.3 Electronic reserves (e-reserves) .................................................................................................. 6 4.4 Library services and resource information…………………………………..………………………….7
5 STUDENT SUPPORT SERVICES .................................................................................................. 7
5.1 Contact with fellow students: Study groups ................................................................................. 7
5.2 myUnisa ..................................................................................................................................... 7
5.3 Discussion classes ..................................................................................................................... 8
5.4 Tutorial support programme ....................................................................................................... 8
6 STUDY PLAN .................................................................................................................................. 8
6.1 Assignments and learning........................................................................................................... 8
6.2 General remarks ......................................................................................................................... 8
6.3 Feedback on assignments .......................................................................................................... 8
6.4 Learning strategy and proposed study programme ......................................................................9
7 PRACTICAL WORK AND WORK-INTEGRATED LEARNING .......................................................11
8 ASSESSMENT ...............................................................................................................................11
8.1 Assessment plan ........................................................................................................................11
8.2 Assessment of assignments ...................................................................................................... 11
ECS3703/101/3/2018
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8.3 Assessment of examination ...................................................................................................... 12 8.3.1 Examination admission ............................................................................................................. 12
8.4 General assignment numbers ................................................................................................... 14
8.5 Unique assignment numbers .................................................................................................... 14
8.6 Due dates of assignments ........................................................................................................ 14
8.7 Submission of assignments ...................................................................................................... 15
8.8 The assignments ...................................................................................................................... 15
9 OTHER ASSESSMENT METHODS ............................................................................................. 41
10 EXAMINATION ............................................................................................................................. 41
10.1 Examination period ................................................................................................................... 41
10.2 Examination paper .................................................................................................................... 42
10.3 Previous examination papers.................................................................................................... 42
11 FREQUENTLY ASKED QUESTIONS ........................................................................................... 42
12 CONCLUSION .............................................................................................................................. 42
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1 INTRODUCTION
Dear Student We are pleased to welcome you to the module International Finance ( ECS3703) and hope that you will
find it both interesting and rewarding. We shall do our best to make your study of this module successful.
You will be well on your way to success if you start studying early in the semester and resolve to
do the assignment(s) properly.
You will receive a number of tutorial letters during the year. A tutorial letter is our way of communicating
with you about teaching, learning and assessment. Tutorial Letter 101 (this one) contains important
information about the scheme of work, resources and assignments for this module. We urge you to read
it carefully and to keep it at hand when working through the study material, preparing for the
assignment(s), preparing for the examination and addressing questions to your lecturers.
In Tutorial Letter 101 you will find the assignments and assessment criteria as well as instructions on
preparing and submitting assignments. This tutorial letter also provides all the information you need on
the prescribed study material and other resources and how to obtain it. Please study this information
carefully and make sure that you obtain the prescribed material as soon as possible.
We have also included certain general and administrative information about this module. Please study
this section of the tutorial letter carefully. Right from the start we would like to point out that you must
read all the tutorial letters you receive during the semester immediately and carefully since they
always contain important and, sometimes, urgent information.
We hope that you will enjoy this module and wish you all the best!
2 PURPOSE AND OUTCOMES
2.1 Purpose
This module will enable learners to have a fundamental understanding of basic issues in international
money and finance. They will be able to view, reflect on and solve current issues in light of their
knowledge of the balance of payments, foreign exchange rates and the different theories thereof.
They will be able to understand the policy implications of the theories they have learned.
2.2 Outcomes
This module will enable learners to name the items of the South African balance of payments (BOP) and
explain the relevance thereof as well as the relevance of imbalances; exchange rates and theories on
how they are determined; demonstrate the relationship between exchange rates and adjustments to the
BOP; and apply various definitions, concepts and theories, sustaining their arguments concerning the
relevant issues; and discuss past and present international monetary systems. More detailed module
outcomes can be found at the beginning of each study unit in the MO001.
ECS3703/101/3/2018
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3 LECTURERS AND CONTACT DETAILS
3.1 Lecturers
We, the lecturers who are responsible for this module, are available to assist you with any
enquiries concerning the prescribed content. You may contact us as follows:
LECTURER’S NAME
E-MAIL ADDRESS
Dr N Mkhize (Club1 Room 2-08)
Tel +2712 433 4623
Dr KO Amusa (Club1 Room 2-25)
Tel +2712 433 4642
Please direct all academic queries regarding this module to the lecturers mentioned above. Also,
ensure that you have your study material with you when contacting the Department about
academic matters.
Administrative queries should be directed to the relevant administrative department by means of the
Unisa SMS or email contact details in your brochure, Study @Unisa (see also section 3.3 below).
PLEASE NOTE: Letters to lecturers may not be enclosed with or inserted into assignments.
3.2 Department of Economics Ms Daphney Nkosi (Administrative Officer)
+2712 433 4661
Club 1, Room 2-01
Corner Dely and Pinaster St
Hazelwood
0081
Pretoria
3.3 University
If you need to contact the university about matters that do not relate to the content of this module,
please consult the brochure, Study @ Unisa, which you received with your study material. This
brochure contains information on how to contact the university (to whom you can write for different
queries; important telephone and fax numbers; and addresses and details of the times certain facilities
are open). Always have your student number at hand when contacting the university.
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4 RESOURCES 4.1 Prescribed book
Your prescribed textbook for this module this year is:
Salvatore, D. 2014. International economics: trade and finance. 11th edition New York: Wiley.
Note that only part 3 and part 4 (chapter 13 to 21) of the book are applicable to this module. Part 1 and
Part 2 are applicable to the module in International Trade only.
Please bear in mind that both the MO001 (study guide) and the textbook are prescribed for
this course. The MO001 may contain applications to South Africa that are not in the textbook, as
well as other supplementary reading. H ow e ve r , the study guide is not a substitute for the
textbook. The purpose of the study guide is to guide your reading of the textbook; expand on or
clarify certain parts of the textbook and supplement it where necessary.
At the end of each study unit in the MO001 there are a number of true-or-false questions (with
answers at the back of the MO001), followed by some short essay questions. The true-or-false questions
are designed to test your knowledge and understanding of specific concepts while the short essay
questions test your ability to explain certain issues in more depth. Try to answer both the true-or- false
and the short essay questions after you have completed a study unit. This will help you to learn actively
rather than passively and make your study programme more effective. Do not be discouraged if you
do not get the correct answers straight away. The aim of the questions is to test your knowledge of
the subject and enable you to learn from your mistakes by referring back to the relevant sections of the
MO001 and the textbook.
Prescribed books can be obtained from the university's official booksellers. Please refer to the list of
official booksellers and their addresses in the brochure, Study @ Unisa. If you have difficulty in
locating your book at these booksellers, please contact the Prescribed Book Section at telephone
number +2712 429 4152 or e-mail [email protected].
4.2 Recommended books There are no recommended books for this module.
4.3 Electronic reserves (e-reserves)
There are no e-reserves for this module.
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4.4 Library services and resources information
For brief information, go to www.unisa.ac.za/brochures/studies
For detailed information, go to the Unisa website at http://www.unisa.ac.za/ and click on Library.
For research support and services of personal librarians, go to
http://www.unisa.ac.za/Default.asp?Cmd=ViewContent&ContentID=7102.
The library has compiled a number of library guides:
finding recommended reading in the print collection and e-reserves –
http://libguides.unisa.ac.za/request/undergrad
requesting material – http://libguides.unisa.ac.za/request/request
postgraduate information services – http://libguides.unisa.ac.za/request/postgrad
finding, obtaining and using library resources and tools to assist in doing research – http://libguides.unisa.ac.za/Research_Skills
how to contact the library/finding us on social media/frequently asked questions – http://libguides.unisa.ac.za/ask
5 STUDENT SUPPORT SERVICES
For information on the various student support systems and services available at Unisa (student
counselling, the tutorial support programme and classes as well as language support), please consult the
brochure, Study @ Unisa, which you received with your study material.
5.1 Contact with fellow students: Study groups
It is advisable to have contact with fellow students. One way of doing this is to form study groups. You
can obtain the names of other students in your area who a re reg is te red for the same modules
by contacting the Department of Student Admission and Registration. For further information, please
consult the brochure, Study @ Unisa.
5.2 myUnisa
If you have access to a computer that is linked to the internet, you can quickly access resources and
information at the university. The myUnisa learning management system is Unisa's online campus that
will help you communicate with your lecturers, other students and the administrative departments of Unisa
– all through the computer and the internet.
To go to the myUnisa website, start at the main Unisa website, http://www.unisa.ac.za, and then click on
the “Login to myUnisa” link on the right-hand side of the screen. This should take you to the myUnisa
website. You can also go there directly by typing in http://my.unisa.ac.za.
Please consult the brochure, Study @ Unisa, which you received with your study material, for more information about myUnisa.
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5.3 Discussion classes
No discussion classes are offered in this module.
5.4 Tutorial support programme
Unisa offers tutor services for students as additional academic support at the various Unisa regional
learning centres throughout the country.
A tutorial is an organised session whereby students and tutor(s) meet regularly at a common venue at
scheduled times to discuss course material and their independent learning skills and where they are
assisted to become motivated and independent learners. Tutorials help the students to develop and
enhance their learning experience and academic performance through interaction with the tutor and
fellow students. Tutorials are not compulsory. Interested students are advised to consult a learning
centre closest to them to enrol for tutorials. For further information on learning centres and tutorials,
consult the brochure, Study @ Unisa. Also, this module has a dedicated e-tutor who conducts activities
with students through myUnisa online platform. The e-tutor site (accessible to students) on myUnisa is
ECS3703-18-S1/S2-E1.
6 STUDY PLAN 6.1 Assignments and learning
Assignments are seen as part of the learning material for this module. As you do the assignments, study
the texts, consult other resources, discuss the work with fellow students or tutors or do research, you are
actively engaged in learning. This module has three assignments that are all designed to help you to
understand what is expected of you more clearly.
If you have access to the internet, you can view and download the MO001 and tutorial letters for the
modules for which you are registered on the university’s online campus, myUnisa (under the Official
Study Material option) at http://my.unisa.ac.za.
6.2 General remarks Consult your brochure, Study @ Unisa for general time management and planning skills.
6.3 Feedback on assignments
As soon as your assignments have been marked, you will receive Tutorial Letter 201, which will
contain solutions to the questions in Assignment 01 and 02. Make sure that you understand where you
have gone wrong, and the reason for making certain mistakes. You will be referred to the relevant pages
in the MO001 (the “study guide” for this module) or the prescribed textbook (TB). Make sure that you
study the relevant prescribed reading again in the case of incorrect answers to see where you have
ECS3703/101/3/2018
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gone wrong and what you could do to obtain a better mark. A detailed explanation will be provided if
the answer is not self-evident from the relevant prescribed text.
Tutorial Letter 101 also contains feedback on the self-assessment assignment (Assignment 03). The
feedback on this assignment is not in the form of model answers, but in the form of a guide on how
essay-type questions should be answered. The p u r p o s e o f t h e self-assessment assignment
is for students to work through and assess how well t h e y know the material. Students are not
required to submit this assignment.
Assignments must be submitted online on myUnisa. No hand delivered/posted assignments will
be accepted.
6.4 Learning strategy and proposed study programme
Approach each study unit in the MO001 study guide as follows: First read the study unit outcomes, which
will help you to focus on the important aspects and issues in a specific unit. Work through each section of
the MO001 together with the relevant chapter in the textbook. Remember that the MO001 serves to
assist you in working through the contents of the textbook. Make notes or summaries as you go along.
Work through the activities provided at the end of every section or study unit in the MO001.
You will see that the activities test your understanding of the content and cover a range of questions that
will be examined. You should also check your answers against the solutions provided. If you are not clear
on certain concepts or theories, revise them before proceeding to the next study unit.
We provide a proposed study programme and three assignments (see section 8.8 of this tutorial letter)
to help you work on this module regularly and systematically. The proposed study programme is based
on the assumption that first-semester students will commence their studies before or during the last
week of January and second-semester students before or during the third week of July.
The table below is an indication of how you can arrange your study programme for ECS3703. Remember
that there are only about 15 study weeks in a semester, so it is vital that you work continuously from the
first week onwards. You should try to master the study units in your MO001 and the associated chapters
in the prescribed textbook during the study weeks listed below. You may find that you take less time
to master the introductory study units and chapters of the textbook than the following chapters –
please allow for this in your study programme. For example, you may take only one week to master study
unit 1, but find that you need three weeks to complete study unit 3.
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PROPOSED STUDY PROGRAMME: FIRST SEMESTER
STUDY WEEK
Week starting
STUDY UNIT
1
15 January
1
2
22 January
2
3
29 January
3
4
5 February
4
5
12 February
1 to 2
6
19 February
3 to 4
Remember to submit compulsory Assignment 01.
Due date: 12 March 2018
7
26 February
5
8
5 March
6
9
12 March
7
10
19 March
5 to 7
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26 March Complete and submit Assignment 02. Due date: 09
April 2018
12
2 April
8 to 9
13
9 April
Complete Assignment 03
14+
16 April
Prepare for examination
ECS3703/101/3/2018
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PROPOSED STUDY PROGRAMME: SECOND SEMESTER
STUDY WEEK
Week starting
STUDY UNIT
1
9 July
1
2
16 July
2
3
23 July
3
4
30 July
4
5
6 August
1 to 2
6
13 August
3 to 4
Remember to submit compulsory Assignment 01. Due date: 27
August 2018
7
20 August
5
8
27 August
6
9
3 September
7
10
10 September
5 to 7
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17 September Complete and submit Assignment 02. Due
date: 25 September 2018
12
24 September
8 to 9
13
1 October
Complete Assignment 03
14+
8 October
Prepare for examination
7 PRACTICAL WORK AND WORK-INTEGRATED LEARNING
There are no practicals for this module.
8 ASSESSMENT 8.1 Assessment plan
In general, assessments will be carried out by the module leader and, where applicable, the module
team and/or contracted external markers and examiners. The names of examiners will also be indicated
on examination question papers.
8.2 Assessment of assignments
8.2.1 Instructions for answering multiple-choice questions
The assignments will be assessed as follows: All the multiple-choice questions will be marked
electronically in accordance with mark-reading masters provided to the assignment section by the module
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leader. One mark will be awarded for each correct answer. No marks will be deducted for incorrect
answers.
Note that Assignment 01 in each semester is a compulsory assignment. Although Assignment 02 is not
compulsory, it will contribute towards your semester mark.
8.3 Assessment of examination
For general information and requirements as far as examinations are concerned, see the brochure, Study @ Unisa, which you received with your study material.
Please note that applications for re-marking, and the administration of re-marked examination
scripts are handled by the Examinations department only and not by academic departments.
8.3.1 Examination admission
For students to fully benefit from our formative tuition and assessment, University management has
decided to continue with compulsory assignments in all modules. You are, therefore, required to submit a
compulsory assignment (Assignment 01) to obtain admission to the examination.
Please ensure that you submit the correct assignment that corresponds with your semester you are
registered for. For example, if you have registered for the first semester course, you should submit the
Assignment 01 and 02 that are listed under semester 1. Failure to comply with this instruction will
invalidate your submission (even if all your answers are correct) and may result in your being denied
admission to the examination. Admission will be obtained by submitting the compulsory assignment and
not by the marks you obtain for it.
Please ensure that Assignment 01 reaches the university before the due date. Late submission of the
assignment will result in your being denied admission to the examination.
Also, note that a sub-minimum mark is required for the semester. You must obtain at least 40% in your final examination for your semester mark to be included in the final mark.
For example, if you obtain 99% in the assignments and 35% in the final examination, your final mark
will not include the 99% semester mark because your examination mark is below the sub-minimum
(threshold). In this instance your final mark will be 35% ( the exam mark). Please ensure that you
familiarise yourself with this important academic rule.
8.3.2 How will this work in practice? Semester mark Your semester mark is based on your assignment marks. The two assignments that you submit
during the semester will contribute towards your semester mark. Different weights are allocated to the
ECS3703/101/3/2018
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Assignments
Marks achieved
Percentage
X weight
Semester mark
01
6/10
60 %
X 0,4
24%
02
Submitted late, question not selected for assessment or
assignment was not submitted at all
0%
X 0,6
0%
Total semester mark
24%
assignments. The first assignment contributes 40% to your semester mark, while the second
contributes 60%. If an assignment is not submitted; or if it is submitted late (for whatever reason), zero
marks will be awarded for such assignment.
For example: Student A
Assignments
Marks achieved
Percentage
X weight
Semester mark
01
7/10
70%
X 0,4
28%
02
4/10
40%
X 0,6
24%
Total semester mark
52%
OR Student B
The examination mark The percentage achieved in the examination is used for calculating your final mark.
Final mark
The weight of the assignments will be 20% and the weight for the examination 80%. Your final mark will be calculated as follows:
Semester mark (out of 100) x 20% + Examination mark (out of 100) x 80%
For example:
Suppose your semester mark is 50% and you obtain 60% in the examination. Your final mark will be:
(50 x 20%) + (60 x 80%)
= (50 x 0,2) + (60 x 0,8)
= 10,0 + 48,0
= 58%
If your final mark (as calculated in the method above) is 50% or more, you pass ECS7303.
If your final mark (as calculated in the method above) is between 45% and 49%, you do not pass ECS3703 but qualify for a supplementary examination.
If your final mark (as calculated in the method above) is less than 45%, you fail ECS3703 and you
have to reregister for it.
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8.4 General assignment numbers
Assignments are numbered consecutively per module, starting from 01. In this module there are
three assignments per semester, namely 01, 02 and 03. Assignment 01 comprises 20 multiple-choice
questions, of which the first ten questions are designed to obtain information required for the
compilation of a student profile for this module. Your kind cooperation is requested, since this
information assists the department in its on-going efforts to ensure quality tuition. Your marks for this
assignment will be based on your answers to question 11 to 20. Assignment 02 comprises 10
multiple-choice questions and Assignment 03 is for self-assessment.
8.5 Unique assignment numbers In addition to the general assignment number (01 or 02), each assignment must have its own unique
number (e.g. 576998). A ssignment 01 a n d A s s i g n m e n t 0 2 consist of only multiple-choice
questions and must be completed on a marking-reading sheet with its own unique assignment number.
Assignment 03 is a self-assessment assignment, which does not need to be submitted.
8.6 Due dates for assignments
Note that the due dates for submitting assignments to Unisa are also indicated in the proposed study
programme.
Late submission of assignments will result in the assignment not being marked and a zero
mark awarded.
ECS3703/101/3/2018
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SEMESTER 1: ASSIGNMENT SUBMISSION DATES
Assignment
number
Unique
Number
Due date
Contents of
assignments
Type of
assignment
01
734108
12 March 2018
Study unit 1 to 4
Multiple-choice
02
866435
09 April 2018
Study unit 5 to 7
Multiple-choice
SEMESTER 2: ASSIGNMENT SUBMISSION DATES
Assignment
number
Unique number
Due date
Contents of
assignments
Type of
assignment
01
763795
27 August 2018
Study unit 1 to 4
Multiple-choice
02
805257
25 Sept. 2018
Study unit 5 to 7
Multiple-choice
8.7 Submission of assignments
You may submit your assignments electronically via myUnisa. Assignments may not be submitted by
fax or e-mail.
For detailed information on assignments, please refer to the brochure, Study @ Unisa. To submit an assignment via myUnisa:
Go to myUnisa.
Log in with your student number and password.
Select the module.
Click on assignments in the menu on the left-hand side of the screen.
Click on the number of the assignment you wish to submit.
Follow the instructions on the screen.
8.8 Assignments
Please read the explanation of the role of assignments in the assessment system in section 6 of this
tutorial before attempting the assignments.
REMINDER
TO BE ADMITTED TO THE EXAMINATION YOU MUST SUBMIT ASSIGNMENT 01 BEFORE THE DUE DATE.
YOUR SEMESTER MARK AND EXAMINATION MARK WILL CONTRIBUTE TO YOUR FINAL MARK.
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THE SEMESTER MARK IS BASED ON THE MARKS YOU OBTAIN FOR ASSIGNMENT 01 AND 02.
Outcomes of assignments:
To assist in achieving the study unit/chapter outcomes
In the instance of Assignment 01 and 02, to:
- assist students in their first engagement with the study material
– encourage critical thinking about the correctness of statements on international finance
– emphasise the critical importance of correct terminology
- accumulate a portion of the final mark for the module
In the instance of Assignment 03, to:
–help students to explain and reason about international finance in a more comprehensive
manner thereby also serving as an aid to examination preparation
Assessment criteria:
The multiple-choice questions in Assignment 01 and Assignment 02 will be marked electronically in
accordance with mark-reading masters provided to the assignment section by the module leader.
One mark will be awarded for each correct answer. No marks will be deducted for incorrect
answers.
Guidelines for self-assessment in respect of Assignment 03 are provided in this tutorial letter.
8.8.1 Assignment 01 (First semester)
THIS ASSIGNMENT IS COMPULSORY. SUBMIT IT BEFORE THE DUE DATE TO OBTAIN
ADMISSION TO THE EXAMINATION. NO EXTENSIONS WILL BE CONSIDERED FOR
SUBMITTING ASSIGNMENTS.
Answer the following questions on a mark-reading sheet. (For guidelines on how to complete mark-
reading sheets, please consult the brochure, Study @ Unisa. For further details on the submission of
completed assignments, see the information under heading 8.7.)
As mentioned, the first ten questions are designed to obtain the required information in order to
compile a student profile for this module. Your kind cooperation is requested since this information
assists the department in its ongoing efforts to ensure quality tuition. Your marks for this assignment
will be based on your answers to the remaining questions from 11 to 20.
ECS3703/101/3/2018
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FIRST SEMESTER
2018
Unique number 734108
Closing date 12 March 2018
Content Study unit 1, 2, 3 and 4 in the MO001
Questions 20 multiple-choice questions (1 mark each for question 11 to 20)
NB Keep a copy of Assignment 01 in the event that it goes missing before it can be assessed.
1. Which of the following statements is correct?
[1] This is my first registration for ECS3703.
[2] I have been registered for this module before, but have never written the examination.
[3] I have written the examination for this module once before.
[4] I have written the examination for this module twice before.
[5] I have written the examination for this module three or more times before.
2. In Matric * …
[1] I passed Mathematics with a C-symbol or higher.
[2] I passed Mathematics with a D-symbol or
lower.
[3] I passed Mathematical Literacy with a C-symbol or higher.
[4] I passed Mathematical Literacy with a D-symbol or lower.
[5] I took neither Mathematics nor Mathematical Literacy.
*Students who do not have a South African Matric should choose the option that is most relevant to them.
3. Which ONE of the following describes your situation best?
[1] I am a full-time student who does not work at all.
[2] I am a full-time student who works part-time for extra pocket money (not to pay for my
studies).
[3] I am a full-time student who works part-time to pay for my studies.
[4] I work full-time and study only after hours; and the work that I do is not related to my degree
at all.
[5] I work full-time and study only after hours; and the work I do is related to my degree.
4. How long after you registered did you receive your study material?
[1] Immediately (with registration)
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[2] In less than a week
[3] Between one and two weeks
[4] Between two and three weeks
5. How long after you registered did you buy or receive your prescribed book?
[1] In less than a week.
[2] Between 1 and 2 weeks.
[3] Between 2 and 3 weeks.
[4] More than 3 weeks.
[5] I already had one when I registered.
6. The section(s) of the MO001 that I had to study to complete this assignment …
[1] helped me to work through the textbook systematically.
[2] did not help me to understand the study material in the textbook better.
[3] were totally irrelevant to the assignment questions.
[4] I did not use the MO001 at all although I have one.
[5] I have not yet received a MO001.
7. Do you plan to consult any of the lecturers for ECS3703 in person?
[1] Yes
[2] No, I can cope on my own.
[3] No, I have to work.
[4] No, it is too far from where I live.
[5] No, for any other reason.
8. Which ONE of the following options describes your situation the best?
[1] I worked through all the prescribed study material before attempting the assignment.
[2] I quickly glanced through the prescribed study material before attempting the assignment.
[3] I did not study the prescribed study material before attempting the assignment, but looked
for the answers in the study material.
[4] I could answer the questions without referring to the study material.
[5] I just chose my answers randomly.
9. Which ONE of the following best describes your access to SMS messages?
[1] I can receive SMS messages on my cellphone.
[2] I can receive SMS messages on the cellphone of someone who lives with me.
[3] I can receive SMS messages on the cellphone of someone I know but who does not live with
ECS3703/101/3/2018
19
me.
[4] I cannot receive SMS messages at all.
10. Which ONE of the following applies to you?
[1] I have access to the internet.
[2] I have access to e-mail.
[3] I have access to both the internet and e-mail.
[4] I do not have access to either the internet or e-mail.
11. Which of the following statements is/are correct?
(a) The balance of payments differs from a national balance sheet.
(b) The balance of payments is more like a company income statement than a balance sheet.
(c) The nominal rand value of South Africa's income payments was less in 2004 than what it was
in 2003.
[1] All the statements are correct.
[2] a and b
[3] a and c
[4] b and c
[5] Only c
12. Which one of the following statements is/are correct with reference to table 13.2, p 389?
(a) The non-official or autonomous transactions amount to $-2 billion.
(b) The official settlement balance is $-2 billion.
(c) The official settlement balance is $2 billion.
[1] This is impossible without additional information provided.
[2] a and b
[3] a only
[4] b only
[5] c only
13. Which of the following statements is/are correct?
(a) The foreign exchange market is stable when the sum of the absolute values of the elasticity
of the nation's demand for imports and the foreign demand for the nation's exports is
greater than one.
(b) A nation’s trade balance may actually worsen soon after devaluation.
(c) The mint parity refers to the gold export point.
20
[1] a and b
[2] a and c
[3] b and c
[4] All the statements are correct.
[5] Only b is correct. 14. A US importer scheduled to make a payment of €100,000 in three months can hedge his foreign
exchange risk by …
[1] purchasing $100,000 in the forward market for delivery in three months.
[2] selling €100,000 in the spot market for delivery in three months.
[3] purchasing €100,000 in the forward market for delivery in three months.
[4] selling €100,000 in the spot market for delivery in three months.
15. Which of the following statements is/are correct?
(a) A change in the spot exchange rate from $1 = €1 to $1 = €2 represents an appreciation of
the dollar relative to the euro.
(b) A forward exchange rate is a weighted average of the exchange rates between the domestic
currency and the nation's most important trade partners.
(c) A US importer scheduled to make a payment of €100 000 in three months can hedge his
foreign exchange risk by purchasing €100 000 in the forward market for delivery in three
months.
[1] Only a
[2] Only b
[3] Only c
[4] All the statements are correct.
[5] a and c 16. According to the monetary approach to the balance of payments, a deficit in the nation's balance of
payments results from …
[1] an excess in the nation's stock of money supply that is not eliminated or corrected by the
nation's monetary authorities.
[2] an excess in the stock of money demanded in the nation that is not satisfied by domestic
monetary authorities.
[3] an excess in the stock of money demanded in the other nation that is not satisfied by the other
nation's monetary authorities.
[4] an excess of imports over exports in the nation.
ECS3703/101/3/2018
21
17. When a South African company imports goods to be paid in three months, South Africa …
[1] credits the current account.
[2] debits the unilateral transfers.
[3] credits the financial account.
[4] credits official reserves.
18. Indicate how the following transaction is recorded in the SA balance of payments with double-entry
bookkeeping:
A local commercial bank exchanges R50 million worth of pounds sterling for rand at the South
African Reserve Bank.
[1] SA credits its financial account by R50 million and debit foreign securities.
[2] SA credits its financial account by R50 million and debits its official reserves account by the
same amount.
[3] SA debits its financial account by R50 million and credits its official reserves account by the
same amount.
[4] Not sure, given the insufficient information provided. 19. Which of the following statements is/are correct with reference to fig 16.1 on p 487?
(a) The more elastic the demand and supply curves of foreign exchange are, the smaller is the
devaluation required to correct a deficit of a given size.
(b) At point E the demand for euros is equal to the supply of dollars.
(c) At an exchange rate of $1/€1 the quantity of euros demanded by the USA is €12 billion per
year.
[1] None of the statements are correct.
[2] a and b
[3] a and c
[4] b and c
[5] Only b
20. A French investor sells R200 000 worth of stock in a South African company and puts the proceeds
in a bank in South Africa. In the South African balance of payments, the sale of stock is recorded as a ______ to the ________ account; the bank deposit is recorded as a ______ to the ________ account.
[1] credit; financial; debit, financial
[2] debit; financial; credit; financial
22
[3] credit; financial; debit; current
[4] debit; financial; debit; current
8.8.2 Assignment 02 (First semester)
THIS ASSIGMENT IS NOT COMPULSORY. HOWEVER, THE MARKS YOU OBTAIN FOR IT WILL
CONTRIBUTE TO YOUR SEMESTER MARK, PROVIDED THAT YOU SUBMIT THE
ASSIGNMENT BEFORE THE DUE DATE. NO EXTENSION CAN BE CONSIDERED FOR
SUBMITTING THIS ASSIGNMENT.
Answer the questions below on a mark-reading sheet. (For guidelines on how to complete mark-
reading sheets, please consult the brochure, Study @ Unisa) For further details on submitting
assignments, see the information under heading 8.7.)
FIRST SEMESTER 2018
Unique number 866435
Closing date 09 April 2018
Content Study units 5, 6 and 7 in the MO001
Questions 10 multiple-choice questions (1 mark each)
1. Which of the following statements is/are correct? The absorption approach
(a) emphasize the level of economic activity. (b) implicitly assumes that slack exists in the economy. (c) views a balance of payments equilibrium from a macroeconomic perspective.
[1] a and b
[2] a and c
[3] b and c
[4] Only a
[5] All the statements are correct.
2. Which of the following statements is/are correct according to the absorption approach? The
improvement in a nation's trade balance resulting from a depreciation of its currency is …
(a) reinforced by the induced fall in imports.
(b) partly neutralised by the induced rise in imports.
ECS3703/101/3/2018
23
(c) partly neutralised by the induced fall in exports.
[1] only a
[2] a and c
[3] b and c
[4] Only b
[5] Only c
3. Which of the following statements is/are correct with reference to fig 18.1 p 551 (The Swan
diagram)? From point N the nation will be able to simultaneously reach internal as well as external
equilibrium by using
(a) expenditure changing policies alone.
(b) expenditure switching policies alone.
(c) both expenditure changing and switching policies.
[1] Only a
[2] Only b
[3] Only c
[4] a and b
[5] All the statements are correct.
4. Which of the following statements is/are correct? According to the Swan diagram, to correct a
balance of payments surplus and inflation, a nation requires a …
(a) devaluation of its currency and either expansionary or contractionary fiscal and monetary
policies.
(b) depreciation of its currency and either expansionary or contractionary fiscal and monetary
policies.
(c) revaluation of its currency and either expansionary or contractionary fiscal and monetary
policies.
[1] All the statements are correct.
[2] a and b
[3] a and c
[4] b and c
[5] Only c
24
5. Which of the following statements is/are correct? In a world of perfectly elastic international capital
flows and fixed exchange rates …
(a) fiscal policy is completely ineffective.
(b) monetary policy is completely ineffective.
(c) a depreciating currency enhances the effects of monetary policy.
[1] Only a
[2] Only b
[3] b and c
[4] Only c
[5] a and c
6. Which of the following statements is/are correct with reference to fig 18.8 (TB p 564)?
(a) Starting from point E the nation can reach full employment using
fiscal policy.
(b) Starting from point E the nation can reach full employment using
monetary policy.
(c) No policy instruments is necessary should the economy be at point E.
[1] Only a
[2] Only b
[3] b and c
[4] Only c
[5] a and c
7. Which of the following statements is/are correct?
(a) Direct controls include trade controls.
(b) Direct controls include restrictions on international capital flows.
(c) Trade controls are less acceptable than multiple exchange rates.
[1] Only a
[2] Only b
[3] a and b
[4] a and c
[5] All the statements are correct
8. Which of the following statements is/are correct with reference to fig 19.9 (left panel) (TB p 600)? A
movement from point E to point C …
ECS3703/101/3/2018
25
(a) can be reached with the use of fiscal policy.
(b) is undesirable.
(c) indicates an increase in the price level.
[1] None of the statements is correct.
[2] Only a
[3] All the statements are correct.
[4] Only c
[5] Only b
9. Which of the following statements is/are correct with reference to fig 19.11 (TB p 605)?
(a) Point E is a long-run equilibrium point. (b) Point A is a long-run equilibrium point. (c) Point G is a long-run equilibrium point.
[1] None of the statements is correct.
[2] Only a
[3] Only b
[4] Only c
[5] a and c
10. Which of the following statements is correct with reference to fig 19.12 (TB p 606)? A supply shock
causes …
(a) the nation never to return to the natural output level that prevailed before the supply shock.
(b) the nation to return to the natural output level that prevailed before the supply shock but at a
higher price level.
(c) the nation to return to the natural output level that prevailed before the supply shock but at a
lower price level.
[1] Only a
[2] Only b
[3] None of the statements is correct.
[4] Only c
[5] a and c
26
8.8.3 Assignment 03 (First semester)
THIS IS A SELF-ASSESSMENT ASSIGNMENT THAT CONSISTS OF ESSAY-TYPE QUESTIONS.
PLEASE DO NOT SUBMIT IT! ATTEMPT THE ASSIGNMENT AFTER YOU HAVE WORKED
THROUGH ALL THE CHAPTERS IN THE MO001 AND USE THE INFORMATION THAT IS PROVIDED
TO ASSESS YOUR ANSWERS.
FIRST SEMESTER 2018
Unique number None
Closing date None
Content The whole module
Questions Four essay-type questions (25 marks each)
1. (a) Explain with the aid of a diagram using the IS/LM/BP analyses the effectiveness of
expansionary monetary policies in an open economy with fixed exchange rates and
perfect capital mobility. (15)
(b)
Explain uncovered interest arbitrage and give an example of it.
(10)
[25]
2. Illustrate with the aid of a diagram (use aggregate demand and aggregate supply curves)
the effect of a petroleum shock on industrial nations and the possible macro-economic policies required to adjust to these shocks.
[25]
3. (a) Explain the measures that have been proposed to avoid financial crises in emerging market economies in the future.
(15)
(b)
Name and briefly explain the possible lags in the quantity response to price changes in international trade.
(10)
[25]
4. (a) Explain the difference between a “national balance sheet” and a “balance of payments” and describe how the two concepts are related. (10)
27
ECS3703/101/3/2018
(b) Evaluate the significance of imbalances that may occur within the balance of payments. (15)
[25] ANSWERS TO ASSIGNMENT 03 (First semester)
We supply you with an indication on what is expected and the mark allocation thereof. It is merely
suggested answers and yours can of course differ and still earn good marks. (MO001 = Module online
study guide and TB=Textbook).
Question 1(a) (TB fig 18.6 p 560)
Diagram…………………………………………………………………………………...(5) LM to right………………………………………………………………………………..(1) Tendency for i to fall………………………………………………………………...(2) Because of perfect capital mobility…………………………………………..(1) Capital outflow………………………………………………………………………...(1) Decrease in M…………………………………………………………………………..(1) LM back to original position……………………………………………………...(1) Attempt to neutralise effect on M would exhaust reserves……….(2) Thus completely ineffective……………………………………………………….(1)
Question 1(b) (TB section 14.6 p 424)
Transfer of funds abroad ………………………………..(1) Involves conversion and reconversion of currencies……(2) Foreign exchange risk………………………………………………….(1) Due to possible depreciation……………………………………...(1) Example……………………………………………………………………….(5)
Question 2 (TB fig 19.12 p 606)
Figure……………………………………………………………………(4) Initial LR Eq at E…………………………………………………..(1) Where LRAS, SRAS and AD intersect…………………….(3) Immediate effect is shift of SRAS to SRAS‟..............(1) New SR Eq at E‟…………………………………………………….(1) With P‟˃ PE...............................................................(1) And Y‟N ˂ YN……………………………………………………………(1)
Stagflation at E‟…………………………………………………….(1) Define stagflation……………………………………………….…(2) Lower level of natural output at Y‟n……………………….(1) Causes prices to fall……………………………………………….(1) Lower costs……………………………………………………………(1) SRAS down to right……………………………………………..…(1)
28
Not all way back to SRAS……………………………………….(1) Reason…………………………………………………………………..(2) New LR Eq at E‟‟…………………………………………………..…(1) Where prices are higher than at E…………………………(1) And output is lower than at E…………………………………(1)
Question 3(a) (TB section 21.6E p 680)
Increased transparency in international monetary relations…………...(1) Why it is essential……………………………………………………………………..(1) IMF role………………………………………………………………………………......(1) Role of early warning financial indicators…………………………………..(1) Foreign investors take note………………………………………………….…..(1)
Strengthening emerging market's banking and financial systems…..(1) Weakness was common…………………………………………………………..(1) Invites financial crises ……………………………………………………………..(1) Name two ways how can be strengthened………………………………(2) IMF plays role…………………………………………………………………………..(1)
Promoting greater private sector involvement……………………………….(1) Example…………………………………………………………………………………….(1) Logic………………………………………………………………………………………….(1) IMF proposal………………………………………………………..…………………..(1)
Question3(b) (TB section 16.5A p 496).
Name and briefly explain:
Recognition…..(2) Decision………..(2) Delivery…………(2) Replacement…(2) Production……(2)
Question 4(a) (MO001 p2)
National balance sheet: Summary-aggregated statement……(1) Of a country's assets and liabilities…(2) Similar to balance sheet………………….(1)
BOP:
Records monetary values…………………………(1) Of flows…………………………………………………...(1) Rather than stocks…………………………………...(1) Similar to income statement…………………….(1) Related: Flows result in changes in stocks…(2)
Question 4(b) (MO001 section 1.4)
Any ten correct facts.......................................................................................................... (10)
29
ECS3703/101/3/2018
8.8.4 Assignment 01 (Second semester) THIS ASSIGNMENT IS COMPULSORY. SUBMIT IT BEFORE THE DUE DATE TO OBTAIN ADMISSION
TO THE EXAMINATION. NO EXTENSIONS WILL BE CONSIDERED FOR SUBMITTING ASSIGNMENTS.
Answer the following questions on a mark-reading sheet. (For guidelines on how to complete mark-reading
sheets, please consult the brochure, Study @ Unisa. For further details on submitting assignments, see the
information under heading 8.7.)
As mentioned, the first ten questions are designed to obtain information required for compiling a student
profile for this module. Your kind cooperation is requested, since this information assists the department in its
ongoing efforts to ensure quality tuition. Your marks for this assignment will be based on your answers to
the remaining questions from 11 to 20.
SECOND SEMESTER 2018
Unique number 763795
Closing date 27 August 2018
Content Study units 1, 2, 3 and 4 in the MO001
Questions 20 multiple-choice questions (1 mark each for questions 11 to 20)
N.B. Keep a copy of Assignment 01 in the event that the assignment is lost before it can be assessed.
1. Which of the following statements is correct?
[1] This is my first registration for ECS3703.
[2] I have been registered for this module before but have never written the examination.
[3] I have written the examination for this module once before.
[4] I have written the examination for this module twice before.
[5] I have written the examination for this module three or more times before.
2. In Matric … *
[1] I passed Mathematics with a C-symbol or higher.
[2] I passed Mathematics with a D-symbol or lower.
[3] I passed Mathematical Literacy with a C-symbol or higher.
[4] I passed Mathematical Literacy with a D-symbol or lower.
[5] I took neither Mathematics nor Mathematical Literacy.
* Students who do not have a South African Matric should choose the options that are most relevant to them.
3. Which ONE of the following describes your situation the best?
[1] I am a full-time student who does not work at all.
30
[2] I am a full-time student who works part-time for extra pocket money (not to pay for my
studies).
[3] I am a full-time student who works part-time to pay for my studies.
[4] I work full-time and study only after hours, and the work that I do is not related to my degree at all.
[5] I work full-time and study only after hours, and the work I do is related to my degree.
4. How long after you registered did you receive your study material?
[1] Immediately (on registration)
[2] In less than a week
[3] Between one and two weeks
[4] Between two and three weeks
[5] More than three weeks
5. How long after you registered did you buy or receive your prescribed books?
[1] In less than a week.
[2] Between one and two weeks.
[3] Between one and three weeks.
[4] More than three weeks.
[5] I already had one when I registered.
6. The section(s) of the MO001 that I had to study to complete this assignment …
[1] helped me to work through the textbook systematically.
[2] did not help me to understand the study material in the textbook better.
[3] was totally irrelevant to the assignment questions.
[4] I did not use the MO001 at all although I have one.
[5] I have not yet received a MO001.
7. Do you plan to consult any of the lecturers for ECS3703 in person?
[1] Yes.
[2] No, I can cope on my own.
[3] No, I have to work.
[4] No, it is too far from where I live.
[5] No, for any other reason.
8. Which ONE of the following describes your situation the best?
[1] I worked through all the prescribed study material before attempting this assignment.
[2] I quickly glanced through the prescribed study material before attempting this assignment.
[3] I did not study the prescribed study material before attempting the assignment, but looked for the
31
ECS3703/101/3/2018
answers in the study material.
[4] I could answer the questions without referring to the study material.
[5] I just chose my answers randomly.
9. Which ONE of the following best describes your access to SMS messages?
[1] I can receive SMS messages on my own cellphone.
[2] I can receive SMS messages on the cellphone of someone who lives with me.
[3] I can receive SMS messages on the cellphone of someone I know but who does not live with me.
[4] I cannot receive SMS messages at all.
10. Which ONE of the following applies to you?
[1] I have access to the internet.
[2] I have access to e-mail.
[3] I have access to both the internet and e-mail.
[4] I do not have access to either the internet or e-mail.
11. Which of the following statements is/are correct? According to the portfolio balance approach, a
decrease in wealth leads domestic residents to increase their demand for the …
(a) domestic money.
(b) domestic bond.
(c) foreign bond.
[1] a and b
[2] b and c
[3] a and c
[4] All the statements are correct.
[5] None of the statements is correct.
12. Which of the following statements is/are correct? According to the monetary approach (under fixed
exchange rates) to the balance of payments, …
(a) a deficit in the nation's balance of payments results from an excess of imports over exports
in the nation.
(b) the size of the nation's money supply will be the one that is consistent with equilibrium in its
balance of payments in the long run.
(c) a non-reserve currency nation has no control over its money supply in the long run.
[1] All the statements are correct.
[2] a and b
[3] a and c
[4] b and c
32
[5] Only c
13. Which of the following statements is/are correct? The changes in the stock of the official gold and other
foreign exchange reserves are …
(a) a measure of the flow of foreign currencies over a period of time.
(b) offset to some extent by a deficit on net service and/or income receipts.
(c) regarded as a current account transaction in the balance of payments.
[1] Only a
[2] Only b
[3] Only c
[4] a and b
[5] a and c
14. Which is correct with respect to the absolute PPP theory?
[1] It postulates that the exchange rate between two currencies is equal to the ratio of the price levels in
the two nations.
[2] It does not consider transportation costs or other obstructions to the flow of international trade.
[3] It can be very misleading.
[4] All the above.
15. Which of the following statements is/are correct?
(a) An increase in the pound price of the dollar represents an appreciation of the pound relative to
the euro.
(b) A shortage of pounds under a flexible exchange rate system results in an appreciation of the
pound.
(c) The exchange rate is kept within narrow limits in different monetary centers by speculation.
[1] a and b
[2] a and c
[3] Only b
[4] b and c
[5] All the statements are correct.
33
ECS3703/101/3/2018
Refer to the information provided in Table 1 below to answer the questions that follow.
Table 1
16. Refer to Table 1. The value of the official settlement balance in billion rand is:
[1] 61 091
[2] 777 832
[3] -838 923
[4] 716 741
[5] 838 923
17. Refer to Table 1. The value of the financial account in billion rand is:
[1] R36 197
[2] 657 912
[3] -13 297
[4] 49 494
18. Refer to Table 1. The equation for the current account is:
[1] Current Account = imports + exports
[2] Current Account = exports - imports + net gold exports
[3] Current Account = imports + exports + export output ratio
[4] Current Account = imports + exports + net direct investment
R millions
Imports of goods and services 893 100
Import-domestic demand ratio 16.57
Exports of goods and service 876 048
Export-output ratio 15.70
Net gold exports 62 655
Net direct investment -13 297
Real value added 2 729 203
Net portfolio investment 49 494
Real gross domestic fixed investment 621 715
Incease (-) in SA Official Reserve Assets 61 091
Increase (+) in Foreign Official Assets 777 832
34
19. When a SA firm imports a good from the UK and pays for it by drawing on its pound
sterling balances in a London bank, the SA firm debits its current account and credits its …
[1] official reserve account.
[2] unilateral transfers account.
[3] services in its current account.
[4] financial account.
20. The Marshall-Lerner condition indicates that …
[1] if the sum of the price elasticities of the demand for imports and the demand for exports exceeds 1,
the foreign exchange market will be stable.
[2] if the sum of the price elasticities of the demand for imports and the demand for exports exceeds 1,
the foreign exchange market will be unstable.
[3] if the net differential between the price elasticities of the demand for imports and the demand for
exports exceeds 1, the foreign exchange market will be stable.
[4] if the net differential between the price elasticities of the demand for imports and the demand for
exports exceeds 1, the foreign exchange market will be unstable.
ECS3703/101/3/2018
35
8.8.5 Assignment 02 (Second semester)
THIS ASSIGNMENT IS NOT COMPULSORY; HOWEVER, THE MARKS YOU OBTAIN FOR IT WILL
CONTRIBUTE TO YOUR SEMESTER MARK, PROVIDED THAT YOU SUBMIT THE ASSIGNMENT
BEFORE THE DUE DATE. NO EXTENSION CAN BE CONSIDERED FOR SUBMITTING THIS
ASSIGNMENT.
Answer the questions below on a mark-reading sheet. For guidelines on how to complete mark-reading
sheets, please refer to the brochure, Study @ Unisa. For further details on submitting assignments, see
the information under heading 8.7.)
SECOND SEMESTER 2018
Unique number 805257
Closing date 25 September 2018
Content Study units 5, 6 and 7 in the MO001
Questions 10 multiple-choice questions (1 mark each)
1. Which of the following statements is/are correct according to the absorption approach? A
depreciation of a deficit nation's currency from a condition of full employment …
(a) may improve the nation's trade balance.
(b) will always improve the nation's trade balance.
(c) will result in an increase in the nation's production.
[1] None of the statements is correct.
[2] a and c
[3] Only c
[4] Only a
[5] Only b
2. Which of the following statements is/are correct? In the real world, the automatic income, price and
monetary adjustment mechanisms, if allowed to operate, are likely to …
(a) reinforce each other but still result in incomplete adjustment.
(b) work at cross purposes from each other and result in incomplete adjustment.
(c) frequently have serious disadvantages.
36
[1] Only a
[2] None of the statements is correct.
[3] a and b
[4] Only b
[5] Only c
3. Which of the following statements is/are correct? Automatic adjustment mechanisms …
(a) avoid the possibility of policy mistakes.
(b) avoid the time lags associated with adjustment policies.
(c) are implemented by the government.
[1] None of the statements is correct.
[2] a and b
[3] Only b
[4] Only c
[5] All the statements are correct.
4. Which of the following statements is/are correct? Points below internal balance line YY in the Swan
diagram indicate …
(a) unemployment.
(b) a balance of payments deficit.
(c) inflation.
[1] Only a
[2] a and c
[3] All the statements are correct.
[4] b and c
[5] Only b
5. Which of the following statements is/are correct with reference to fig 18.6 (TB p 560)? Point F
indicates …
(a) a tendency for the nation's interest rate to rise.
(b) full employment.
(c) external imbalance.
ECS3703/101/3/2018
37
[1] Only a
[2] Only b
[3] b and c
[4] Only c
[5] a and c
6. Which of the following statements is/are correct with reference to fig 18.8 (TB p 564)? Point E
indicates …
(a) domestic unemployment.
(b) full employment.
(c) a tendency for the nation's interest rate to decrease.
[1] None of the statements is correct.
[2] Only b
[3] Only a
[4] a and c
[5] All the statements are correct.
7 Which of the following statements is/are correct with reference to fig 18.8 (TB p 564)? Point F
indicates …
(a) equilibrium on the money market.
(b) full employment.
(c) equilibrium on the goods market.
[1] Only a
[2] Only b
[3] Only c
[4] b and c
[5] All the statements are correct.
8. Which of the following statements is/are correct with reference to fig 19.9 (left panel in the TB p 600)?
Expansionary fiscal or monetary policy …
(a) can increase the nation's output temporarily above its natural level.
(b) will eventually result in a higher price level.
(c) will be inflationary.
38
[1] All the statements are correct.
[2] a and c
[3] Only b
[4] Only c
[5] a and b
9. Which of the following statements is/are correct with reference to fig 19.11 (TB p 605)?
(a) Point E is a short-run equilibrium point.
(b) Point A is a long run equilibrium point.
(c) A movement from point E to point G indicates growth.
[1] None of the statements is correct.
[2] Only a
[3] Only b
[4] Only c
[5] a and c
10. Which of the following statements is/are correct with reference to fig 19.12 (TB p 606)? A supply
shock results in …
(a) economic growth.
(b) lower prices.
(c) a higher level of natural output.
[1] None of the statements is correct.
[2] Only a
[3] a and c
[4] Only c
[5] a and b
ECS3703/101/3/2018
39
8.8.6 Assignment 03 (Second semester)
THIS IS A SELF-ASSESSMENT ASSIGNMENT THAT CONSISTS OF ESSAY-TYPE QUESTIONS.
PLEASE DO NOT SUBMIT IT. ATTEMPT THE ASSIGNMENT AFTER YOU HAVE WORKED
THROUGH ALL THE CHAPTERS IN THE MO001 AND USE THE INFORMATION PROVIDED BELOW
TO ASSESS YOUR ANSWERS.
SECOND SEMESTER 2018
Unique number None
Closing date None
Content The whole module
Questions Four essay-type questions (25 marks each)
1. Explain the effectiveness of expansionary fiscal policies as well as easy monetary policies in an
open economy with flexible exchange rates and perfect capital mobility with the aid of two diagrams, using the IS/LM/BP analysis.
[25]
2. Discuss covered interest arbitrage on the foreign exchange markets. Include an example in your answer.
[25]
3. (a) Name and explain the items of the financial account of the South African balance of
payments. (15)
(b) Briefly explain the difference between the elasticities approach and the absorption approach as interpretations of the effect of devaluation on disequilibria on the balance of payments. (10)
[25]
4. Discuss the purchasing power parity theory. [25]
40
ANSWERS TO ASSIGNMENT 03 (SECOND SEMESTER) We give you an indication of what is expected and also the mark allocation. These are merely
suggested answers and yours may differ and still earn good marks. (MO001 = Module online study guide
and TB=Textbook).
Question 1 (TB section 18.5B p 564)
Figure ..................................................................................................................................................... (5)
Fiscal policy: IS to right ............................................................................................................................................... (1) Intersection with LM curve indicates tendency of i-rate to↑ .............................................................. (2) There is capital inflow............................................................................................................................ (1) Appreciation ......................................................................................................................................... (1) IS left to original position ...................................................................................................................... (1) Reason (Z↑ and X ↓) ........................................................................................................................... (1) Original Y............................................................................................................................................... (1) Thus ineffective .................................................................................................................................... (1)
Monetary policy: LM to right ............................................................................................................................................ (1) Intersection with IS curve indicates tendency of i-rate to↓ ................................................................ (2) There is capital outflow ........................................................................................................................ (1) Depreciation. ......................................................................................................................................... (1) IS to right .............................................................................................................................................. (1) Reason (Z↓ and X ↑) ........................................................................................................................... (1) LM little back ........................................................................................................................................ (1) Reason .................................................................................................................................................. (1) New eq at higher Y ............................................................................................................................... (1) Thus effective ....................................................................................................................................... (1)
Question 2 (TB sections 14.6B p 426. MO001 sections 2.6B p
25)
Explain carry trade ................................................................................................................................. (2) Explain hedging of carry trade ............................................................................................................... (5) Example ............................................................................................................................................... (10) Explain diminishing of gains .................................................................................................................. (8)
Question 3(a) (MO001 section 1.3.2)
Direct………………………………………………………………(1) Define………………………………………………………...(2) SA version…………………………………………………..(1) Meaning of pos/neg…………………………………...(2) Preferred…………………………………………………….(1)
Portfolio………………………………………………………….(1) Define………………………………………………………...(2) Notoriously fickle………………………………………..(1)
Other……………………………………………………………….(1) Define………………………………………………………...(1)
ECS3703/101/3/2018
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Trade credit………………………………………………...(1) Balance.............................................................. (1)
Question 4 (b) (TB section 17.5 p 535)
Elasticities: Stresses the demand side………………………………………………………..(1)
Implicitly assumes that slack exists in the economy…………………(2) Improvement in trade balance depends on the price elasticity..(1)
of demand for imports and exports………………………………………….(2) Absorption: Stresses the supply side……………………………………………………………(1)
Implicitly assumes adequate demand……………………………………..(1) for a nation's exports and substitutes……………………………………….(2)
Question 4 (TB section 15.2 p 444) (MO001 section 3.2 p31) Absolute PPP:
Describe…………………………………………….(2) Formula and explanation thereof……...(2) Explain law of one price……………………..(2) Role of arbitrage………………………..........(2) Reasons for being misleading.…………...(6)
Relative PPP:
Describe……………………………………………(2) Formula and explanation thereof…..…(3) Reasons for being misleading……………(4)
Conclusions of empirical evidence………..(2)
9 OTHER ASSESSMENT METHODS
There are no other assessment methods for this module.
10 EXAMINATION For general examination guidelines and examination preparation guidelines, please refer to the b r o c h u r e , Study @ Unisa.
10.1 Examination period
This module is offered in a semester period of approximately 15 weeks. This means that if you are
registered for the first semester, you will write the examination in May/June 2018 and the supplementary
examination will be written in October/November 2018. If you are registered for the second semester you
will write the examination in October/November 2018 and the supplementary examination will be written
in May/June 2019.
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During the semester, the Examination Section will provide you with information on the examination in
general, examination venues, examination dates and examination times.
10.2 Examination paper
The main features of the examination paper are as follows:
The examination will consist of one two-hour paper and will comprise essay questions similar to those
given in Assignment 03. It is thus important that you work through Assignment 03.
The structure of the examination paper for 2018 is as follows:
It is a two-hour paper and consists of two sections (A and B) making up a total of 100 marks. Section A
consists of two compulsory questions. Section B consists of four questions, of which you must do two.
Each question counts 25 marks.
A final mark (semester mark + examination mark, as explained under section 8.3.1: How will this work in
practice) of 50% is required to pass this module.
10.3 Previous examination papers
Some previous examination papers are available to students on myUnisa under the Official study
Material option. Should you obtain previous examination papers from elsewhere, we advise you not to
focus on t h e s e p a p e r s only as the content of modules and, therefore, examination papers
may change from year to year. To concentrate only on previous examination papers will not
guarantee a pass. You must be able to answer questions on all the prescribed work and study outcomes.
11 FREQUENTLY ASKED QUESTIONS
The brochure Study @ Unisa contains an A-Z guide to the most relevant study information.
12 CONCLUSION
International Finance is a very relevant subject (refer for example to many of the issues in the Euro-zone
crisis). We trust that you will enjoy the module and that it will be useful to you in future.
We trust that you will enjoy this module.
All the best!
Your lecturers
