ECS2602
EXAM
PACK
2025
, Revision assignment
Note: Since the examination will be a fully online MCQ examination with the randomisation
of the MCQ questions based on the whole syllabus, this revision assignment is not in
learning unit sequence.
1. Which one of the following statements is INCORRECT?
A positive relationship exists between the ____
A. real exchange rate and exports.
B. domestic level of output and imports.
C. real exchange rate and imports.
D. level of foreign output and exports.
2. Which of the following relationships is central in the IS-LM-PC model?
The relationship between _____
A. unemployment, employment and output.
B. unemployment, employment and inflation.
C. unemployment, output and nominal wages.
D. employment, output and the mark-up by firms.
3. Which one of the following statements is INCORRECT?
A. An increase of 20% in the price of cabbage is an example of inflation.
B. If the population in South Africa grows at 5% per year, and the economic growth rate is
3% per year, a decline in the real GDP per capita occurs.
C. If total nominal output increases by 2% during a specific year, and the general price level
increases by 4%, the real GDP will decrease, and the nominal GDP will increase.
D. If a country's labour force is 32 million and 6.4 million are unemployed for a period; then
the unemployment rate is 20%.
4. In our labour market model, which one of the following factors will shift the wage-setting
curve to the right?
A. A decrease in the unemployment rate.
B. An increase in unemployment benefits.
C. An increase in the mark-up.
D. An increase in the nominal wage.
5. This question is based on the diagram below:
1
,Which one of the following statements is INCORRECT?
A. The IS curve will shift from IS to IS1 because of a decrease in the tax rate.
B. The IS curve will shift from IS to IS1 because of an increase in investors' confidence.
C. The IS curve will shift from IS1 to IS because of a decrease in the interest rate.
D. The quantity of money will not the IS curve from IS1 to IS or from IS to IS1.
6. This question is based on the following consumption function C = c0 + cYD. in the goods
market.
If autonomous spending is 1000 million, disposable income 2000 million and the marginal
2900 million.
propensity to consume is 0.95, the consumption should be __________
7. Autonomous consumption will ____
A. decrease if income decreases.
B. increase if income increases.
C. remain unchanged and is independent of the level of income.
D. change the level of output and income.
8. Which one of the following statements is correct?
A. Inflation targeting is an example of a stabilisation policy.
B. The main policy variable of monetary policy is the interest rate.
C. A contractionary monetary policy implies a decrease in the interest rate to increase the
money supply.
D. An increase in taxes implies the implementation of expansionary fiscal policy.
9. Study the diagram of the IS-LM-PC model below and answer the question:
Suppose that the SARB policy rate is equal to r.
Which one of the following statements is correct about the TOP figure in the diagram?
A. The relationship between the interest rate and the level of output is negative.
B. The relationship between the interest rate and the level of output is positive.
C. The is no relationship between the interest rate and the level of output at point a.
D. There is an uncertain relationship between the interest rate and the level of output.
2
, 10. If the SA rand depreciates against the USA dollar, it leads to _______
A. more imports and less exports of goods and services.
B. less imports and more exports of goods and services.
C. possibly a trade deficit.
D. an increase in the interest rate in SA.
11. Given a marginal propensity to consume of 0.8, an increase of 100 in government
spending and an increase of 80 in taxes will cause the level of output and income to ___
A. increase by 180.
B. increase by 100.
C. increase by 80.
D. decrease by 80.
12. Which one of the following statements is correct?
A. There are different motives for holding money, and therefore we can distinguish between
the demand for active balances and the demand for passive balances.
B. Both the demand for active and passive balances are determined by the economy's
output and income level.
C. The level of transactions needed by people in the economy will influence the demand for
both active and passive balances.
D. The higher the interest rate, the higher is the passive demand for money.
13. Which one of the following statements is correct?
A. The bargained real wage at the natural rate of unemployment is 0.96.
B. At point a the bargained real wage is higher than the implied (or feasible) real wage.
C. The implied real wage is lower than the bargained real wage at point c.
D. An increase in the mark-up of firms will shift the PS curve upwards.
14. Study the following IS-LM-PC diagram and answer the question:
3
EXAM
PACK
2025
, Revision assignment
Note: Since the examination will be a fully online MCQ examination with the randomisation
of the MCQ questions based on the whole syllabus, this revision assignment is not in
learning unit sequence.
1. Which one of the following statements is INCORRECT?
A positive relationship exists between the ____
A. real exchange rate and exports.
B. domestic level of output and imports.
C. real exchange rate and imports.
D. level of foreign output and exports.
2. Which of the following relationships is central in the IS-LM-PC model?
The relationship between _____
A. unemployment, employment and output.
B. unemployment, employment and inflation.
C. unemployment, output and nominal wages.
D. employment, output and the mark-up by firms.
3. Which one of the following statements is INCORRECT?
A. An increase of 20% in the price of cabbage is an example of inflation.
B. If the population in South Africa grows at 5% per year, and the economic growth rate is
3% per year, a decline in the real GDP per capita occurs.
C. If total nominal output increases by 2% during a specific year, and the general price level
increases by 4%, the real GDP will decrease, and the nominal GDP will increase.
D. If a country's labour force is 32 million and 6.4 million are unemployed for a period; then
the unemployment rate is 20%.
4. In our labour market model, which one of the following factors will shift the wage-setting
curve to the right?
A. A decrease in the unemployment rate.
B. An increase in unemployment benefits.
C. An increase in the mark-up.
D. An increase in the nominal wage.
5. This question is based on the diagram below:
1
,Which one of the following statements is INCORRECT?
A. The IS curve will shift from IS to IS1 because of a decrease in the tax rate.
B. The IS curve will shift from IS to IS1 because of an increase in investors' confidence.
C. The IS curve will shift from IS1 to IS because of a decrease in the interest rate.
D. The quantity of money will not the IS curve from IS1 to IS or from IS to IS1.
6. This question is based on the following consumption function C = c0 + cYD. in the goods
market.
If autonomous spending is 1000 million, disposable income 2000 million and the marginal
2900 million.
propensity to consume is 0.95, the consumption should be __________
7. Autonomous consumption will ____
A. decrease if income decreases.
B. increase if income increases.
C. remain unchanged and is independent of the level of income.
D. change the level of output and income.
8. Which one of the following statements is correct?
A. Inflation targeting is an example of a stabilisation policy.
B. The main policy variable of monetary policy is the interest rate.
C. A contractionary monetary policy implies a decrease in the interest rate to increase the
money supply.
D. An increase in taxes implies the implementation of expansionary fiscal policy.
9. Study the diagram of the IS-LM-PC model below and answer the question:
Suppose that the SARB policy rate is equal to r.
Which one of the following statements is correct about the TOP figure in the diagram?
A. The relationship between the interest rate and the level of output is negative.
B. The relationship between the interest rate and the level of output is positive.
C. The is no relationship between the interest rate and the level of output at point a.
D. There is an uncertain relationship between the interest rate and the level of output.
2
, 10. If the SA rand depreciates against the USA dollar, it leads to _______
A. more imports and less exports of goods and services.
B. less imports and more exports of goods and services.
C. possibly a trade deficit.
D. an increase in the interest rate in SA.
11. Given a marginal propensity to consume of 0.8, an increase of 100 in government
spending and an increase of 80 in taxes will cause the level of output and income to ___
A. increase by 180.
B. increase by 100.
C. increase by 80.
D. decrease by 80.
12. Which one of the following statements is correct?
A. There are different motives for holding money, and therefore we can distinguish between
the demand for active balances and the demand for passive balances.
B. Both the demand for active and passive balances are determined by the economy's
output and income level.
C. The level of transactions needed by people in the economy will influence the demand for
both active and passive balances.
D. The higher the interest rate, the higher is the passive demand for money.
13. Which one of the following statements is correct?
A. The bargained real wage at the natural rate of unemployment is 0.96.
B. At point a the bargained real wage is higher than the implied (or feasible) real wage.
C. The implied real wage is lower than the bargained real wage at point c.
D. An increase in the mark-up of firms will shift the PS curve upwards.
14. Study the following IS-LM-PC diagram and answer the question:
3
