ECS1601 Exam with correct answers
Which of the following is/are correct?
a) Households are confronted with unlimited wants, but with limited resources with which to satisfy
those wants
b) The scarcity of resources necessitate households to make choices - correct answer -both a and b are
correct
Which of the following is/are correct regarding the distinction between macroeconomics and
microeconomics?
a) The price of apples at the supermarket is an example of a macroeconomic variable.
b) An increase in the general price level (inflation) in the economy is an example of a macroeconomic
variable. - correct answer -only b is correct
A flow variable is defined as a variable that is measured over a period. Which one of the following
variables is not an example of a flow variable?
[1] National income
[2] The balance on Sibahle's savings account
[3] Budget deficit
[4] Total production - correct answer -[2] The balance on Sibahle's savings account
Which of the following is not an acceptable intervention by the public sector in a mixed economy?
[1] the provision of funds for public goods such as parks and streetlights
[2] regulation of the pricing behaviour of monopoly industries
[3] stabilisation of the economy during periods of economic instability
,[4] regulation of the price increases that result from changes in patterns of demand and supply in the
competitive market - correct answer -[4] regulation of the price increases that result from changes in
patterns of demand and supply in the competitive market
The factors of production in an economy are ...
[1] households, capital, land, entrepreneurship
[2] government, household, firms, natural resources
[3] natural resources (land), labour, capital, and entrepreneurship
[4] human capital, land, natural resources, technology - correct answer -[3] natural resources (land),
labour, capital, and entrepreneurship
Which of the following are the remuneration of the factors of production?
[1] natural resources, rent, interest, labour
[2] rent, salaries and wages, interest, profit
[3] households, land, profit, capital
[4] entrepreneur, firms, capital, labour - correct answer -[2] rent, salaries and wages, interest, profit
In the circular flow of income and spending ...
[1] savings, imports, taxes are leakages, while investment, government spending, exports are injections.
[2] imports, taxes, investments are leakages, while exports, investments, government spending are
injections.
[3] savings, exports, taxes area leakages, while imports, investments, government spending are
injections.
[4] savings, government spending, imports are leakages, while investments, exports, taxes are injections.
- correct answer -[1] savings, imports, taxes are leakages, while investment, government spending,
exports are injections.
In the circular flow of goods and services ...
,[1] firms sell factors of production on the goods market.
[2] goods and services offered for sale on the goods market are purchased by firms.
[3] households combine factors of production and produce consumer goods and services.
[4] households offer factors of production in the factor market. - correct answer -[4] households offer
factors of production in the factor market.
What does the letters A, B, C and D in the figure represent?
a) A represents factors of production
b) B represents goods and services
c) C represents foreign sector
d) D represents spending by firm
[1] only a is correct
[2] only b and c are correct
[3] only b and d are correct
[4] a and b are correct, while c and d are incorrect - correct answer -[3] only b and d are correct
Which of the following is not an injection into the economy of South Africa?
[1] A domestic company in South Africa sells leather to a client that is in Italy.
[2] A decision by Ruth to save a larger portion of her salary. [3] Spending by the department of health on
new hospital facilities.
[4] The local bakery bought a new machinery and equipment that will improve the capacity to produce
more bread. - correct answer -[2] A decision by Ruth to save a larger portion of her salary.
The circular flow model reveals that an increase in South African exports will ...
[1] increase output and income in the rest of the world.
, [2] increase revenue to South African firms.
[3] increase revenue to foreign firms.
[4] decrease South African imports. - correct answer -[2] increase revenue to South African firms
Which of the following is not considered a macroeconomic issue?
[1] A surplus in the trade balance due to increasing output. [2] The increase in inequality in the country
of Botswana.
[3] The rise in general price level in Zimbabwe.
[4] The unemployment rate of a town in Limpopo province. - correct answer -[4] The unemployment
rate of a town in Limpopo province.
Which one of the following statements is true about correlation and causality?
[1] Correlation between variables occurs when two variables have a relationship.
[2] Correlation between two variables proves causation.
[3] The example of a correlation is when an increase in value of exports cause a fall in economic growth.
[4] Causality between two variables always implies correlation. - correct answer -[1] Correlation
between variables occurs when two variables have a relationship.
Which one of the following statements is incorrect?
[1] Money is different from income and wealth
[2] Income refers to reward earned in exchange for offering factors of production in the production
process
[3] It is good to hold wealth in the form of money during periods of high inflation because the value is
protected
[4] Money functions as a medium of exchange because it is generally accepted in payment for goods and
services - correct answer -[3] It is good to hold wealth in the form of money during periods of high
inflation because the value is protected
Which of the following is/are correct?
a) Households are confronted with unlimited wants, but with limited resources with which to satisfy
those wants
b) The scarcity of resources necessitate households to make choices - correct answer -both a and b are
correct
Which of the following is/are correct regarding the distinction between macroeconomics and
microeconomics?
a) The price of apples at the supermarket is an example of a macroeconomic variable.
b) An increase in the general price level (inflation) in the economy is an example of a macroeconomic
variable. - correct answer -only b is correct
A flow variable is defined as a variable that is measured over a period. Which one of the following
variables is not an example of a flow variable?
[1] National income
[2] The balance on Sibahle's savings account
[3] Budget deficit
[4] Total production - correct answer -[2] The balance on Sibahle's savings account
Which of the following is not an acceptable intervention by the public sector in a mixed economy?
[1] the provision of funds for public goods such as parks and streetlights
[2] regulation of the pricing behaviour of monopoly industries
[3] stabilisation of the economy during periods of economic instability
,[4] regulation of the price increases that result from changes in patterns of demand and supply in the
competitive market - correct answer -[4] regulation of the price increases that result from changes in
patterns of demand and supply in the competitive market
The factors of production in an economy are ...
[1] households, capital, land, entrepreneurship
[2] government, household, firms, natural resources
[3] natural resources (land), labour, capital, and entrepreneurship
[4] human capital, land, natural resources, technology - correct answer -[3] natural resources (land),
labour, capital, and entrepreneurship
Which of the following are the remuneration of the factors of production?
[1] natural resources, rent, interest, labour
[2] rent, salaries and wages, interest, profit
[3] households, land, profit, capital
[4] entrepreneur, firms, capital, labour - correct answer -[2] rent, salaries and wages, interest, profit
In the circular flow of income and spending ...
[1] savings, imports, taxes are leakages, while investment, government spending, exports are injections.
[2] imports, taxes, investments are leakages, while exports, investments, government spending are
injections.
[3] savings, exports, taxes area leakages, while imports, investments, government spending are
injections.
[4] savings, government spending, imports are leakages, while investments, exports, taxes are injections.
- correct answer -[1] savings, imports, taxes are leakages, while investment, government spending,
exports are injections.
In the circular flow of goods and services ...
,[1] firms sell factors of production on the goods market.
[2] goods and services offered for sale on the goods market are purchased by firms.
[3] households combine factors of production and produce consumer goods and services.
[4] households offer factors of production in the factor market. - correct answer -[4] households offer
factors of production in the factor market.
What does the letters A, B, C and D in the figure represent?
a) A represents factors of production
b) B represents goods and services
c) C represents foreign sector
d) D represents spending by firm
[1] only a is correct
[2] only b and c are correct
[3] only b and d are correct
[4] a and b are correct, while c and d are incorrect - correct answer -[3] only b and d are correct
Which of the following is not an injection into the economy of South Africa?
[1] A domestic company in South Africa sells leather to a client that is in Italy.
[2] A decision by Ruth to save a larger portion of her salary. [3] Spending by the department of health on
new hospital facilities.
[4] The local bakery bought a new machinery and equipment that will improve the capacity to produce
more bread. - correct answer -[2] A decision by Ruth to save a larger portion of her salary.
The circular flow model reveals that an increase in South African exports will ...
[1] increase output and income in the rest of the world.
, [2] increase revenue to South African firms.
[3] increase revenue to foreign firms.
[4] decrease South African imports. - correct answer -[2] increase revenue to South African firms
Which of the following is not considered a macroeconomic issue?
[1] A surplus in the trade balance due to increasing output. [2] The increase in inequality in the country
of Botswana.
[3] The rise in general price level in Zimbabwe.
[4] The unemployment rate of a town in Limpopo province. - correct answer -[4] The unemployment
rate of a town in Limpopo province.
Which one of the following statements is true about correlation and causality?
[1] Correlation between variables occurs when two variables have a relationship.
[2] Correlation between two variables proves causation.
[3] The example of a correlation is when an increase in value of exports cause a fall in economic growth.
[4] Causality between two variables always implies correlation. - correct answer -[1] Correlation
between variables occurs when two variables have a relationship.
Which one of the following statements is incorrect?
[1] Money is different from income and wealth
[2] Income refers to reward earned in exchange for offering factors of production in the production
process
[3] It is good to hold wealth in the form of money during periods of high inflation because the value is
protected
[4] Money functions as a medium of exchange because it is generally accepted in payment for goods and
services - correct answer -[3] It is good to hold wealth in the form of money during periods of high
inflation because the value is protected
