ECS2602
Exam Pack
2025
,ECS 2602
ASSIGNMENTS
Question 1
Which one of the following statements is correct?
Select one:
A. If the unemployment rate in South Africa is 25.3%, it means that 25.3% of the total
population does not work.
B. In this module, we only study the demand side of the economy, which includes the
goods market and the financial market. The labour market forms part of the supply
side analysis and is therefore excluded from this module.
C. Economic growth and unemployment are areas on which macroeconomics focus
in contrast with the aggregate output level and employment level on which
microeconomics focus.
D. If the total nominal output increase 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.
Question 2
Question text
Gross domestic product (GDP) ________
Select one:
A. is the broadest, best-known, and most used measure of economic activity
expressed in real or nominal prices.
B. at current prices takes a continuous and considerable rise in the prices of goods
and services into consideration.
C. includes imports of goods and services.
,D. is the total value of all goods and services produced within a country's boundaries
in a particular period.
Question 3
This question is based on the following diagram:
By how much must government spending increase to reach full employment?
Select one:
A.2 000
B.2 500
C.400
D.4 000
Feedback
Calculate the multiplier. The formula for the multiplier is 1/1-c. Given a marginal
propensity to consume of 0.8 (given on the diagram), the value of the multiplier is
1/1-0.8 = 1/0.2 = 5. The vertical intercept is R800. The equilibrium level of output and
income is R4 000 (given on the diagram), and the level of full employment is R6 000
[6 000 – 4 000 = 2 000; the output and income gap]. The vertical intercept is R800.
The equilibrium level of output and income is R4 000 (given on the diagram), and the
level of full employment is R6 000 [6 000 – 4 000 = 2 000; the output and income
gap]. If government spending is to be used to reach full employment, it implies that
, government spending must increase by R400; in other words, the income
gap/multiplier = 2 000/5 = 400. Remember, a multiplier of 5 indicates that for every
R1 increase in autonomous spending output and income increases with R5.
Question 4
Question text
Consider the consumption functions of country A and country B.
Country A: C = 2 000 + 0.7YD
Country B: C = 1 000 + 0.9YD
Which one of the following statements is correct?
Select one:
A. If the level of disposable income is R5 000 in both countries, the
consumption spending will be the same for both countries.
B. Graphically presented, the slope of the consumption curve for country A will be
steeper than the slope of the consumption curve for country B.
C. In country B, total consumption is definitely higher than in country A.
D. In country B, induced consumption is definitely higher than in country A.
Feedback
The consumption spending formula is C = c o + cYD. Therefore, Country A = 2 000 +
0.7(5 000) = 2 000 + 3 500 = 5 500 and for Country B = 1 000 + 0.9(5 000) = 1 000 +
4 500 = 5 500. It is the same for both countries.
Induced consumption is that part of consumption that depends on income. We need
to know what induced consumption is, the marginal propensity to consume, and what
income is, and we can, therefore, not conclude that it is definitely higher in country B.
What total consumption is, depends on the level of output and income. Since we do
not know the output and income level, we do not know what the total consumption is.
The slope of the consumption curve for country B is steeper.
Exam Pack
2025
,ECS 2602
ASSIGNMENTS
Question 1
Which one of the following statements is correct?
Select one:
A. If the unemployment rate in South Africa is 25.3%, it means that 25.3% of the total
population does not work.
B. In this module, we only study the demand side of the economy, which includes the
goods market and the financial market. The labour market forms part of the supply
side analysis and is therefore excluded from this module.
C. Economic growth and unemployment are areas on which macroeconomics focus
in contrast with the aggregate output level and employment level on which
microeconomics focus.
D. If the total nominal output increase 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.
Question 2
Question text
Gross domestic product (GDP) ________
Select one:
A. is the broadest, best-known, and most used measure of economic activity
expressed in real or nominal prices.
B. at current prices takes a continuous and considerable rise in the prices of goods
and services into consideration.
C. includes imports of goods and services.
,D. is the total value of all goods and services produced within a country's boundaries
in a particular period.
Question 3
This question is based on the following diagram:
By how much must government spending increase to reach full employment?
Select one:
A.2 000
B.2 500
C.400
D.4 000
Feedback
Calculate the multiplier. The formula for the multiplier is 1/1-c. Given a marginal
propensity to consume of 0.8 (given on the diagram), the value of the multiplier is
1/1-0.8 = 1/0.2 = 5. The vertical intercept is R800. The equilibrium level of output and
income is R4 000 (given on the diagram), and the level of full employment is R6 000
[6 000 – 4 000 = 2 000; the output and income gap]. The vertical intercept is R800.
The equilibrium level of output and income is R4 000 (given on the diagram), and the
level of full employment is R6 000 [6 000 – 4 000 = 2 000; the output and income
gap]. If government spending is to be used to reach full employment, it implies that
, government spending must increase by R400; in other words, the income
gap/multiplier = 2 000/5 = 400. Remember, a multiplier of 5 indicates that for every
R1 increase in autonomous spending output and income increases with R5.
Question 4
Question text
Consider the consumption functions of country A and country B.
Country A: C = 2 000 + 0.7YD
Country B: C = 1 000 + 0.9YD
Which one of the following statements is correct?
Select one:
A. If the level of disposable income is R5 000 in both countries, the
consumption spending will be the same for both countries.
B. Graphically presented, the slope of the consumption curve for country A will be
steeper than the slope of the consumption curve for country B.
C. In country B, total consumption is definitely higher than in country A.
D. In country B, induced consumption is definitely higher than in country A.
Feedback
The consumption spending formula is C = c o + cYD. Therefore, Country A = 2 000 +
0.7(5 000) = 2 000 + 3 500 = 5 500 and for Country B = 1 000 + 0.9(5 000) = 1 000 +
4 500 = 5 500. It is the same for both countries.
Induced consumption is that part of consumption that depends on income. We need
to know what induced consumption is, the marginal propensity to consume, and what
income is, and we can, therefore, not conclude that it is definitely higher in country B.
What total consumption is, depends on the level of output and income. Since we do
not know the output and income level, we do not know what the total consumption is.
The slope of the consumption curve for country B is steeper.
