ECS1601/001/3/2021
Tutorial Letter 001/3/2021
Economics 1B (Macroeconomics I)
Semester 1 and 2
Department of Economics
IMPORTANT INFORMATION
Please register on myUnisa, activate your myLife e-mail account and make sure that you have
regular access to the myUnisa module website, ECS1601-2021-S1, as well as discussion forum.
, Assignment 03
Semester 1: 789067
Semester 2: 648154
Unique number
Closing date 05 July 2021
Learning units 6 to 8 of the Study guide and the relevant chapters
of the prescribed book
Content
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. Incorrect
[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. Correct
, • Consumption increases as income increases.
• Consumption is positive even if income is zero, this reflects the influence of non-
income determinants of consumption spending.
• When income increase consumption increases, but the increase in C is less THAN
Income.
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. Correct
b) There is no foreign sector. Correct
c) Prices and wages fluctuate. Incorrect
d) The stock of money supply and interest rates fluctuate. Incorrect
[1] a and d
[2] b and c
[3] a and b
[4] c and d
Basic assumption of Keynes model.
• The economy consists of households and firms only.
• There is no government.
• There is no foreign sector.
• Prices, wages and interest are given.
• Spending determines the level of activity(production)
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. Incorrect- disposable income
Tutorial Letter 001/3/2021
Economics 1B (Macroeconomics I)
Semester 1 and 2
Department of Economics
IMPORTANT INFORMATION
Please register on myUnisa, activate your myLife e-mail account and make sure that you have
regular access to the myUnisa module website, ECS1601-2021-S1, as well as discussion forum.
, Assignment 03
Semester 1: 789067
Semester 2: 648154
Unique number
Closing date 05 July 2021
Learning units 6 to 8 of the Study guide and the relevant chapters
of the prescribed book
Content
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. Incorrect
[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. Correct
, • Consumption increases as income increases.
• Consumption is positive even if income is zero, this reflects the influence of non-
income determinants of consumption spending.
• When income increase consumption increases, but the increase in C is less THAN
Income.
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. Correct
b) There is no foreign sector. Correct
c) Prices and wages fluctuate. Incorrect
d) The stock of money supply and interest rates fluctuate. Incorrect
[1] a and d
[2] b and c
[3] a and b
[4] c and d
Basic assumption of Keynes model.
• The economy consists of households and firms only.
• There is no government.
• There is no foreign sector.
• Prices, wages and interest are given.
• Spending determines the level of activity(production)
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. Incorrect- disposable income
