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University of South Africa ECS 2602 Exam Practice Questions and Answers
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University of South Africa ECS 2602 Exam Practice Questions and Answers All Correct Answers for Grade A+.
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2020/1 Which one of the following statements is not a macroeconomic issue?1.1 1. The unemployment rate in South Africa, according to the strict definition, was 26,6% in2016.
2. The drought experienced in 2015/16 reduced many crop harvests and caused food priceinflation in
South Africa.
3. The annual inflation rate in South Africa rose from 2015 to 2016.
4. Because of high inflation, it is expected that the interest rate will increase.
5. The drought experienced in 2015/16 reduced the total maize crop harvested and causedthe
price of maize in South Africa to rise.
Test Which of the following statements is/are correct?
Bank
a) In this module we only study the demand side of the economy which includes the goods
1. market and the financial market. The labour market form part of the supply side analysis
and are therefore excluded from this module.
b) The two most important accounts of the balance of payments are the current account
and the financial account.
c) If total output decreases with 2% during a specific year and the general pricelevel
increases with 4% the real GDP will decrease and the nominal GDP will increase.
1) a, b and c
2) Only a and b
3) Only a and c
4) Only b and c.
5) None of the options 1 t o 4
2020/1 Which of the following would be included in the calculation of gross domesticproduct
(GDP) of South Africa?
1.2
a. A citizen from Zimbabwe (foreign country) earns a wage at a gold mine in SouthAfrica.
b. A farmer from Gauteng (South Africa) buys his neighbour's tractor.
c. Ford Motor Company of America builds an assembly plant in the Eastern Cape
(South Africa).
d. Exports of agricultural products to Britain.
e. Imports of motorcars from Japan to South Africa.
, 1. a, b, c, d and e
2. Only a, c and d
3. Only b, c and e
4. Only a and c
5. Only b and e
2020/1 Which of the following are endogenous variables in the goods market model?
1.3 1. The level of output and income and investment spending.
2. Marginal propensity to consume and the level of output and income.
3. The level of output and income.
4. Investment spending.
Test Which of the following statements are correct? If the marginal propensity to saveincreases in
Bank the goods market model …
a. it implies that households save a larger proportion of a change (or increase)in their
income.
b. it implies a decrease in the marginal propensity to consume. This decrease inthe
marginal propensity to consume leads to a decline in consumption spending. A
decline in consumption spending in return causes the demand for goods to decrease
and eventually output and income decline.
c. investment spending will increase.
d. investment spending will be unchanged since investment spending is not a function
of savings. It is an exogenous variable and is determined by factorssuch as the
interest rate, expectations, access to credit and confidence and is therefore
unchanged.
1) a, b and c
2) b and d
3) Only b and c
4) a, b and d
5) Only a and d
2020/2 Which of the following are exogenous variables in the consumption functionC = c0 +
1.2 cYD?
a. The level of output and income.
b. Marginal propensity to consume.
c. Autonomous consumption.
d. Consumption spending.
1. a, b and c
2. b, c and d
3. a and d
4. b and c
5. Only b
2020/2 Autonomous consumption will while induced consumption isinfluenced by .
1.5 1. decrease if income decreases the level of disposable income
2. increase if income increases non-income determinants of consumer spending
3. remain unchanged the level of disposable income
2020/1 The difference between expenditure on the gross domestic product (GDP) and grossdomestic
expenditure (GDE) is that …
1.4
1. expenditure on the GDP includes both imports and exports, while GDE includes exports andexcludes
2020/2 imports.
,1.3 2. expenditure on the GDP includes exports and excludes imports, while GDE includes bothimports
and exports.
3. expenditure on the GDP includes exports and excludes imports, while GDE includes importsand
2021/1
excludes exports.
1.4 4. expenditure on the GDP includes imports and excludes exports, while GDE includes exportsand
excludes imports.
2020/2 Which of the following statements are correct?
1.7 a. Real output and income and real GDP mean the same in our goods marketmodel.
b. In the consumption function C = c0 + cYD; a change in autonomous consumption
changes the vertical intercept and the C curve shifts, while a change in marginal
propensity to consume changes the slope of the C curve.
c. Using the goods market model; if the government decreases taxes by R20million,
consumer spending increase by more than R20 million.
d. In the equation C = c0 + cYD, c0 represents that part of consumption that isnot
influenced by income.
1. a, b, c and d
2. Only a, b and d
3. Only c and d
4. Only a, c and d
5. Only a and d
Test Which of the following is/are correct in terms of the goods market model?
Bank 6.
a. Autonomous consumption is represented by c0 + Ī + G – cT.
b. Induced consumption is presented by cYD. \
c. The demand for goods determines the amount of goods that producers produce and
they will only change their production if the demand for goods changes.
d. Equilibrium is presented by Y = c0 + c(Y−T) + Ī + G.
1) a, b, c and d
2) Only a, b and d
3) Only a, c and d
4) Only a, b and c
5) Only b, c and d
Test Which of the following statements with regards to the following consumptionfunction? C = c0
Bank 3. + cYD is/are correct?
a. A change in the marginal propensity to consume will result in a change in
income.
b. If autonomous consumption should be zero consumption will be equal to cYD.
c. A change in autonomous consumption will cause a change in marginal
propensity to consume.
1) a, b and c
2) Only a and b
3) Only a and c
4) Only b and c
5) None of the options 1 to 4
2020/1 Expenditure on the gross domestic product is …
1.5 a. spending on goods and services produced inside the borders of a country, including
imports and excluding exports.
, b.spending on goods and services produced inside the borders of a country,excluding
imports and including exports.
c. the same as the demand for domestic goods.d.the
same as the domestic demand for goods.
1. a and c
2. a and d
3. b and c
4. b and d
2020/1 In our goods market model an increase in the demand for goods implies …
1.6 a. an increase in output
b. an increase in income
c. an increase in the level of employment
d. a decrease in unemployment
e. a decrease in savings
1. a, b, c and d
2. a, b, c and e
3. a, b, d and e
4. a, c, d and e
5. Not option 1, 2, 3 or 4
2020/2 In the goods market model a decrease in taxes will result in …
1.9 a. an increase in autonomous consumption.
2021/1 b. an increase in disposable income.
1.14 c. an increase in income.
Test d. a decrease in induced consumption.
Bank 4.
e. a downward shift of the ZZ curve.
1. a, b, c and e
2. a, b and d
3. b, c, d and e
4. a, c and d
5. None of the options 1 to 4
2020/1 Which of the following are correct in terms of the goods market model?
1.7 a. G↑ → Z↑ → Y↑ → YD↑ → C↑
2021/1 b. I↑ → Z↑ → Y↑ → YD↑ → C↑
1.5 c. T↓ → Z↑ → Y↑ → YD↑ → C↑
Test d. c0↑ → Z↑ → Y↑ → YD↑ → C↑
Bank 5.
1. Only a, b and c
2. Only a, b and d
3. Only b, c and d
4. Only a, c and d
5. a, b, c and d
2020/2 If Z < Y, it means that there is:
1.10 1. An excess demand for goods: Y↓ → C↓ → Z↓2.
An excess demand for goods: Y↑ → C↑ → Z↑
3. An excess supply of goods: Y↓ → C↓ → Z↓
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