ECS1601 EXAM QUESTIONS WITH CORRECT
ANSWERS GRADED A+
When the interest rate level decreases the demand for______ motive
increases, which results into an increase in______.
[1] transaction; passive balance
[2] transaction; active balance
[3] speculative; passive balance
[4] speculative; active balance
[3] speculative; passive balance
As the monetary authority______ the repo rate, the interest rate will______ as
well. The opportunity cost of holding money______ and individuals will choose
to hold_____ money.
[1] increases; increase; increase; more
[2] decreases; increase; decrease; less
[3] increases; decrease; increase; more
[4] increases; increase; increase; less
[4] increases; increase; increase; less
The figure below illustrates the demand for money for transaction (L1) and
speculative motives (L2) in South Africa.
If South Africa's economy grows, one would expect ...
[1] curves L1 and L2 to shift to the right.
[2] curves L1 and L2 to shift to the left.
[3] no effect on curve L1, but a rightward shift of curve L2. [4] a rightward shift
of curve L1 and no effect on curve L2.
[4] a rightward shift of curve L1 and no effect on curve L2.
,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
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.
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
[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
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.
[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
[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.
[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.
[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.
[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.
[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
[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 statements concerning money is correct?
[1] The value of money is not based on the confidence that financial
intermediaries will be able to control the supply to achieve stability and that
the purchasing power does not fall.
[2] Paper money was developed since specialisation between countries led to
increases in trade, causing the use of coins to be inconvenient as they were
ANSWERS GRADED A+
When the interest rate level decreases the demand for______ motive
increases, which results into an increase in______.
[1] transaction; passive balance
[2] transaction; active balance
[3] speculative; passive balance
[4] speculative; active balance
[3] speculative; passive balance
As the monetary authority______ the repo rate, the interest rate will______ as
well. The opportunity cost of holding money______ and individuals will choose
to hold_____ money.
[1] increases; increase; increase; more
[2] decreases; increase; decrease; less
[3] increases; decrease; increase; more
[4] increases; increase; increase; less
[4] increases; increase; increase; less
The figure below illustrates the demand for money for transaction (L1) and
speculative motives (L2) in South Africa.
If South Africa's economy grows, one would expect ...
[1] curves L1 and L2 to shift to the right.
[2] curves L1 and L2 to shift to the left.
[3] no effect on curve L1, but a rightward shift of curve L2. [4] a rightward shift
of curve L1 and no effect on curve L2.
[4] a rightward shift of curve L1 and no effect on curve L2.
,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
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.
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
[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
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.
[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
[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.
[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.
[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.
[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.
[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
[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 statements concerning money is correct?
[1] The value of money is not based on the confidence that financial
intermediaries will be able to control the supply to achieve stability and that
the purchasing power does not fall.
[2] Paper money was developed since specialisation between countries led to
increases in trade, causing the use of coins to be inconvenient as they were
