QUESTION ONE (25 Marks)

South African electricity generation is dominated by a monopoly, ESKOM. Develop an economic intervention plan with measurable outcomes to permanently stop load shedding. Your plan should highlight its benefits and its consequences (intended and unintended) for the micro and macro economy. It should run for a period of two years.

QUESTION TWO (25 marks)

Assume the Zimbabwean government through the Grain Marketing Board (GMB) set a producer price ceiling for maize at USD280.00 per ton for the 2020/2021 marketing season.

With reference to the scenario above, discuss with the aid of diagrams why governments such as the Zimbabwean government intervenes by setting price ceilings.

QUESTION THREE (25 marks)

Inflation is a condition where the general price level is rising continuously indicating the imbalance between supply and demand of goods at current prices. In South Africa the large part of total inflation has been due to cost-push inflation.

With regards to the above:

3.1 Explain the difference between cost-push and demand-pull inflation with aid of graphs. (15 marks)

3.2 Analyse the effects of both types of inflation on unemployment using the Phillips Curve.

(10 marks)

QUESTION 4 (25 Marks)

4.1 The recent COVID-19 pandemic has underscored the importance of the interaction between monetary and fiscal authorities’ responses during stress periods. With clear examples and justification, evaluate which policy was more effective at minimizing the COVID-19 shock in the corporate sector. (15 marks)

4.2 Given the recent global experiences, discuss financial markets consequences of lack of fiscal and monetary policy coordination. (10 marks)

Answers to Above Questions on Managerial Economics

Answer 1: An economic plan in order to permanently stop load shedding in South Africa needs to consider important aspects such as the key objectives to be accomplished, key components of the plan which includes an assessment of diversification of energy resources, improvement of energy infrastructure, measures to achieve energy conservation etc.