QUESTION 4 (30) 4.2 Explain how 4,3 Discuss ANY FIVE (5) arguments for and again

Question

QUESTION 4 (30) 4.2 Explain how 4,3 Discuss ANY FIVE (5) arguments for and against the use of trade barriers by the government te between an exchange rate and the foreign exchange market. (4) changes in exchange rates can influence exports and imports in your country. of your country. (15) 4.4 As a result of pressure from the Southern African Clothing and Textile Workers Union (SACTWU), the South African government has decided to increase the tariff on textiles. Explain who would gain and who would lose as a result of the decision taken by the South African government. (5) rP^@do9 up

Explanation / Answer

4.1

Exchange rate

Foreign Exchange market

It is the rate at which one country’s currency is exchanged with other country.

It is a place or platform where participants are able to sell, buy, exchange and speculate currencies

4.2
When the exchange rate with other nation currency increases, the home currency devaluates. So when the currency devaluates the exports increases as it would cheaper for the other nation and Imports becomes costly as the home nation has to pay more

4.3

For

Against

It would support the domestic firms

It would make domestic firms to be incompetent

Provides employment

It reduces the productivity

Reduces poverty

It reduces export

Protects culture

Promotes technology

Increases barrier with other nations

Reduces cost of production

4.4
With the increase in tariffs, the cost per unit increases which reduces the quantity consumed. The increased cost affects the consumer in terms of reduced consumer surplus thereby affecting consumption

Exchange rate

Foreign Exchange market

It is the rate at which one country’s currency is exchanged with other country.

It is a place or platform where participants are able to sell, buy, exchange and speculate currencies

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