ECS1601/101/3/2021
8.6.3 Assignment 03 (semester 1)
Assignment 03
Unique number 789067
Closing date 09 April 2021
Learning units 6 to 8 of the Study guide and the relevant
Content chapters of the prescribed book
Questions 30 questions
Weight 30% of the semester mark
To submit Through myUnisa or on a mark-reading sheet
3.1 In the simple Keynesian model, which one of the following statements is incorrect?
[1] Spending may be equal to production and income.
[2] Spending may be greater than production and income.
[3] Spending may be greater than production, but smaller than income.
[4] Spending may be less than production and income.
3.2 The consumption function is based on the premise that as income increases, consumption
expenditure …
[1] increases by a larger amount.
[2] increases by the same amount.
[3] remains constant unless saving also changes.
[4] increases by a smaller amount.
3.3 Which of the following assumptions for the simple Keynesian model of a closed economy
without a government are correct?
a) The economy consists of households and small firms only.
b) There is no foreign sector.
c) Prices and wages fluctuate.
d) The stock of money supply and interest rates fluctuate.
[1] a and d
[2] b and c
[3] a and b
[4] c and d
37
, 3.4 In the simple Keynesian model, which of the following is incorrect?
[1] I represents total investment spending
[2] Y represents income
[3] marginal propensity to consume together with the marginal propensity to save equals
one
[4] induced consumption is a fraction of income
3.5 Which of the following is not one of the factors that determines the firm’s decision to invest?
[1] consumption expenditure
[2] expected return
[3] cost of capital
[4] interest rate
3.6 An increase in the marginal propensity to consume …
[1] decreases the value of the multiplier
[2] does not affect the multiplier.
[3] increases the value of the multiplier.
[4] will not occur because the marginal propensity to consume is set by government.
3.7 The equation C = 70 + 0,65Y, where C is consumption and Y is disposable income, tells us
that …
[1] households will save R70 if their disposable income is zero and will consume 0,65 of
any increase in disposable income they receive.
[2] households will consume R70 if their disposable income is zero and will consume 0,65
of any increase in disposable income they receive.
[3] households earn R70 and spend three quarters of their income.
[4] households will consume 0,35 of whatever level of disposable income they receive.
Use the information below to answer questions 3.8 to 3.10.
If 𝐶̅ = R25 billion, I = R35 billion and c = 0.80
3.8 The marginal propensity to save is …
[1] 0.80
[2] 1
[3] 1.20
[4] 0.20
38
8.6.3 Assignment 03 (semester 1)
Assignment 03
Unique number 789067
Closing date 09 April 2021
Learning units 6 to 8 of the Study guide and the relevant
Content chapters of the prescribed book
Questions 30 questions
Weight 30% of the semester mark
To submit Through myUnisa or on a mark-reading sheet
3.1 In the simple Keynesian model, which one of the following statements is incorrect?
[1] Spending may be equal to production and income.
[2] Spending may be greater than production and income.
[3] Spending may be greater than production, but smaller than income.
[4] Spending may be less than production and income.
3.2 The consumption function is based on the premise that as income increases, consumption
expenditure …
[1] increases by a larger amount.
[2] increases by the same amount.
[3] remains constant unless saving also changes.
[4] increases by a smaller amount.
3.3 Which of the following assumptions for the simple Keynesian model of a closed economy
without a government are correct?
a) The economy consists of households and small firms only.
b) There is no foreign sector.
c) Prices and wages fluctuate.
d) The stock of money supply and interest rates fluctuate.
[1] a and d
[2] b and c
[3] a and b
[4] c and d
37
, 3.4 In the simple Keynesian model, which of the following is incorrect?
[1] I represents total investment spending
[2] Y represents income
[3] marginal propensity to consume together with the marginal propensity to save equals
one
[4] induced consumption is a fraction of income
3.5 Which of the following is not one of the factors that determines the firm’s decision to invest?
[1] consumption expenditure
[2] expected return
[3] cost of capital
[4] interest rate
3.6 An increase in the marginal propensity to consume …
[1] decreases the value of the multiplier
[2] does not affect the multiplier.
[3] increases the value of the multiplier.
[4] will not occur because the marginal propensity to consume is set by government.
3.7 The equation C = 70 + 0,65Y, where C is consumption and Y is disposable income, tells us
that …
[1] households will save R70 if their disposable income is zero and will consume 0,65 of
any increase in disposable income they receive.
[2] households will consume R70 if their disposable income is zero and will consume 0,65
of any increase in disposable income they receive.
[3] households earn R70 and spend three quarters of their income.
[4] households will consume 0,35 of whatever level of disposable income they receive.
Use the information below to answer questions 3.8 to 3.10.
If 𝐶̅ = R25 billion, I = R35 billion and c = 0.80
3.8 The marginal propensity to save is …
[1] 0.80
[2] 1
[3] 1.20
[4] 0.20
38
