ECS 1601 QUESTION AND ANSWER REAL EXAM QUESTIONS
AND WELL EXPLAINED ANSWERS 2025
QUESTION: 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 - ANSWER-both a and b are correct
QUESTION: 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. - ANSWER-only b is correct
QUESTION: 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 - ANSWER-[2] The balance on Sibahle's savings account
QUESTION: 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 - ANSWER-[4] regulation of the price increases that result from changes in patterns
of demand and supply in the competitive market
QUESTION: 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 - ANSWER-[3] natural resources (land), labour,
capital, and entrepreneurship
QUESTION: 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 - ANSWER-[2] rent, salaries and wages, interest, profit
QUESTION: 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.
- ANSWER-[1] savings, imports, taxes are leakages, while investment, government spending, exports are
injections.
QUESTION: 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. - ANSWER-[4] households offer factors of
production in the factor market.
QUESTION: 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 - ANSWER-[3] only b and d are correct
QUESTION: 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.
AND WELL EXPLAINED ANSWERS 2025
QUESTION: 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 - ANSWER-both a and b are correct
QUESTION: 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. - ANSWER-only b is correct
QUESTION: 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 - ANSWER-[2] The balance on Sibahle's savings account
QUESTION: 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 - ANSWER-[4] regulation of the price increases that result from changes in patterns
of demand and supply in the competitive market
QUESTION: 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 - ANSWER-[3] natural resources (land), labour,
capital, and entrepreneurship
QUESTION: 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 - ANSWER-[2] rent, salaries and wages, interest, profit
QUESTION: 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.
- ANSWER-[1] savings, imports, taxes are leakages, while investment, government spending, exports are
injections.
QUESTION: 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. - ANSWER-[4] households offer factors of
production in the factor market.
QUESTION: 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 - ANSWER-[3] only b and d are correct
QUESTION: 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.
