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Introduction To Macroeconomics: Assignment 2
Question 1
a)fig 1. Shows a table of the average (quarterly) inflation rate in south Africa (2008-2012).

YEARS

2008

2009

2010

2011

2012

Quarters

Q1

9.9

8.4

5.7

3.9

6.1

Q2

11.7

7.8

4.5

4.6

5.8

Q3

13.4

6.4

3.5

5.4

5.1

Q4

11.1

6

3.5

6.1

5.6

fig1.1 shows a graph of average quarterly inlation rates of South Africa (2008-
2012)

From the above graph, it can be concluded that the inflation rate in south Africa over the past five years has been fairly unstable, It is can be seen from graph from the decreasing and increasing trends over the quarters. South Africa experienced a rapidly increasing inflation rate in 2008, the inflation rate percentage was in the range of 11.5%, in 2009, the inflation rate decreased to 7.1%,in 2010 the average was 4,3% which indicates that the economy was doing well as there was a major drop in the inflation percentage but there was an increase in 2011 and 2012 with the ranking of 5.0% and 5.6 % respectively. b) Explanation of the trends identified is as follows:

The upwards trends as can be seen from the graph(year 2008-2009) represents an increase of inflation and they can be influenced by the economic events in the country such as excess money growth and price increase in the economy. The price increase is triggered by an increase in international oil prices, a drop in exchange rate nationwide, excessive salary and wage hikes, or an increase in food prices caused by a drought. (South African Reserve Bank , how to fight inflation, fact sheet 3,p2).

Long periods of high...
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