ECS1601 EXAM SERIES 2025
BOTH QUESTIONS AND
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
ANSWERS--------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 ANSWERS--------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 ANSWERS--------[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 ANSWERS--------[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 ANSWERS--------
[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 ANSWERS--------[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 ANSWERS--------[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
ANSWERS--------[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 ANSWERS--------[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 ANSWERS--------[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 ANSWERS--------[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 ANSWERS---
-----[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
ANSWERS--------[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
BOTH QUESTIONS AND
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
ANSWERS--------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 ANSWERS--------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 ANSWERS--------[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 ANSWERS--------[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 ANSWERS--------
[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 ANSWERS--------[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 ANSWERS--------[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
ANSWERS--------[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 ANSWERS--------[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 ANSWERS--------[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 ANSWERS--------[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 ANSWERS---
-----[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
ANSWERS--------[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
