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ECS1601 assignment 1 2024
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ECS1601 assignment 1 2024
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1. UNISA2. 2024
3. ECS1601-24-S1
4. Welcome Message
5. Assessment 1
Assessment 1
Started on Monday, 20 May 2024, 12:30 PM
State Finished
Completed on Monday, 20 May 2024, 1:24 PM
Time taken 54 mins 27 secs
Marks 15.00/16.00
Grade 96.45 out of 100.00
Question 1
Complete
Mark 1.00 out of 1.00
Which of the following are three major
ows in the economy as a whole?
a. Spending, total income, and
production.
b. Total spending, total income,
and total production.
c. Saving, total investment, and
spending.
d. Total income, spending, and
saving.
The economy consists of three major
ows, namely total spending, total
income, and total production.
,Question 2
Complete
Mark 1.00 out of 1.00
Which of the following statements is/are
correct in explaining the difference
between production and income?
a) Income is the remuneration that the
factors of production receive for being
part of the production process.
b) Production is when business
combines factors of production in
planned activity to bring about goods and
services to satisfy the needs and wants
of society.
c) Production is when a rm combines
factors of production in planned activity
to bring about goods that only satisfy
society’s wants.
d) Income is the reward that the factors
of production receive for not taking part
in the production process.
a. a and b
b. a and c
c. b and d
d. a, b, c and d
Income is the remuneration that the
factors of production receive for being
part of the production process.
Production is when business combines
factors of production in planned activity
to bring about goods and services to
satisfy the needs and wants of society.
,Question 3
Complete
Mark 1.00 out of 1.00
Which one of the following statements is
true about causality and correlation?
a. Causality between two variables
always implies correlation.
b. Causation between two
variables proves correlation.
c. An example of correlation is
when an increase in the value of
imports causes a rise in
economic growth.
d. Correlation between variables
occurs when two variables have
a relationship
Correlation does not imply causation.
Correlation between variables occurs
when two variables have a relationship.
Question 4
Complete
Mark 0.00 out of 1.00
Which of the following statements is/are
incorrect in explaining the tax being
treated as leakage in the circular ow of
income between household and rms?
a) Tax is the part of income that is
received by households but then paid to
government.
b) Tax is taken out of the circular ow of
income.
c) Households can spend it on goods
and services.
d) Tax is an amount that is withdrawn or
leaked from the circular ow of income.
a. b only
b. a, b and c
c. b and c
d. c only
e. b, c and d
Tax is taken out of the circular ow of
income and households cannot spend it
on goods and services.
,Question 5
Complete
Mark 1.00 out of 1.00
Households are confronted with………, but
with ………resources with which to satisfy
those wants.
a. unlimited wants; limited
b. limited wants; limited
c. unlimited wants; unlimited
d. limited wants; unlimited
Households are confronted with
unlimited wants, but with limited
resources to satisfy those wants.
Question 6
Complete
Mark 1.00 out of 1.00
Which of the following statements is/are
correct in explaining the difference
between production and income?
a) Income is the remuneration that the
factors of production received for being
part of the production process.
b) Production is when business
combines factors of production in
planned activity to bring about goods and
services to satisfy the needs and wants
of society.
c) Production is when a rm combines
factors of production in planned activity
to bring about goods that only satisfy
society’s wants.
d) Income is the reward that the factors
of production receive for not taking part
in the production process.
a. a and b
b. a and c
c. b and d
d. a, b, c and d
Income is the remuneration that the
factors of production received for being
part of the production process.
Production is when business combines
factors of production in planned activity
to bring about goods and services to
satisfy the needs and wants of society.
,Question 7
Complete
Mark 1.00 out of 1.00
Which of the following is/are correct
regarding the distinction between
microeconomics and macroeconomics?
a) An increase in the general price level in
the economy is an example of
macroeconomic variables.
b) The SARB decided to keep the repo
rate unchanged at 3.5%; this is in line
with expectations of most economists.
c) The price of oranges at the
supermarket is an example of the
microeconomic variables.
a. b and c
b. a only
c. a and b
d. a, b and c
Refer to the distinction between
macroeconomics and microeconomics
on page 2 of the prescribed textbook.
Question 8
Complete
Mark 1.00 out of 1.00
….…. is an example of a stock variable,
while ………… is an example of a ow
variable.
a. Balance on savings account;
assets
b. Wealth; investment
c. Pro t; demand for labour
d. Gold production; unemployment
wealth is an example of a stock variable
while investment is an example of a ow
variable.
,Question 9
Complete
Mark 0.00 out of 1.00
An open-market policy by the South
African Reserve Bank may involve:
a) selling of government stock to
increase the liquidity de cit of the banks.
b)buying of government stock to
increase the liquidity de cit of the banks.
c)selling of government stock to
contribute lower interest rates.
d) buying of government stock to
contribute to lower interest rates.
a. only a and c are correct
b. only a and d are correct
c. only b and c are correct
d. only b and d are correct
If the SARB wishes to create or enlarge
the bank’s liquidity shortage, it sells
government bonds to the banks, thereby
reducing their cash reserves. This will
force the banks to make use of the SARB
nancing facilities through repurchase
agreements. If the SARB wants to
stimulate the creation of bank deposits, it
can use the open market policy to ease
liquidity conditions and lower interest
rates by buying government bonds.
,Question 10
Complete
Mark 1.00 out of 1.00
Suppose Musa is a stock-broker who
always keeps R10 000 of his portfolio in
the form of cash in order to purchase
bonds when prices fall. This is an
example of
a. transaction demand.
b. speculative demand.
c. precautionary demand.
The transactions demand for money
arises when individuals hold money for
transactions purposes such as to
purchase goods and services.
Precautionary demand for money arises
due to individuals needing to hold money
for unexpected occurrences such as
illness. According to the question, Musa’s
decision to hold R10 000 is driven by
need to earn interest from bonds.
Therefore, this is de ned as the
speculative demand for money.
Question 11
Complete
Mark 1.00 out of 1.00
The quantity of money in an economy is
…
a. determined by the interaction
between the cost of credit and
the demand for money.
b. xed by the South African
Reserve Bank.
c. dependent on the money
supplied.
d. determined by the Minister of
Finance.
e. decided jointly by the Reserve
Bank and the government, as it
has important implications for
in ation targeting.
The quantity of money demanded is
determined by the cost of credit. The
cheaper it is to take out the credit, the
more money will be demanded. The
quantity if money is determined by the
interaction of the interest rate (cost of
credit) and the demand for money.
,Question 12
Complete
Mark 1.00 out of 1.00
Use the table below to nd the total
comprehensive measure of money for
the year 2013…
a. R87 014 million
b. R549 323 million
c. R636 337 million
d. R2 513 865 million
e. R1 132 039 million
To calculate the most comprehensive
measure of money (M3) M2 needs to be
added to the long-term deposits: 2
051 308 (M2) + 462 557 (long term
deposits) = 2 513 865 M3 is thus equal to
2 513 865 for the year 2013.
Question 13
Complete
Mark 1.00 out of 1.00
Use the following statements to answer
the question:
(a) Chickens can be used as money in
the commodity money system.
(b) In the modern money system, a debit
card is regarded as money.
a. Both statements a and b are
correct.
b. Only statement b is correct.
c. None of the statements is
correct.
d. Only statement a is correct.
In the commodity money system, certain
goods could be used as means of
payment between the two parties
involved in the transaction of any kind, as
long as they agree about the commodity.
Debit cards do not represent money.
,Question 14
Complete
Mark 1.00 out of 1.00
Which one of the following does not
represent money as a medium of
exchange?
a. bank notes
b. credit cards
c. demand deposits
d. coins
Bank notes, coins and demand deposits
represent money as a medium of
exchange. However, credit cards are
simply a convenient means of making a
payment by obtaining a short-term loan
from a bank or nancial institution that
issued the card.
Question 15
Complete
Mark 1.00 out of 1.00
Which of the following would be classed
as a monetary policy?
a. A decrease or increase in the
quantity of money.
b. An increase in government
spending.
c. An increase in the demand for
loans.
d. An increase or decrease in the
interest rate.
Refer to section 14.8 on accommodation
policy on page 270 to 271 of the
textbook. Monetary policy is a measure
taken by the central bank to in uence the
quantity of money or interest rates to
achieve price stability, full employment
and economic growth. For instance, the
SARB uses the repo rate as an
instrument to adjust or in uence the
interest rate at which credit is made
available by banks to their clients.
Therefore, an increase or decrease in the
interest rate can be classed as a
monetary policy.
, Question 16
Complete
Mark 0.00 out of 1.00
A decrease in the interest rate…
a. lowers the opportunity cost of
money and leads to an increase
in the quantity of money
demanded.
b. raises the opportunity cost of
money and leads to an increase
in the quantity of money
demanded
c. lowers the opportunity cost of
money and leads to a decrease
in the quantity of money
demanded.
d. raises the opportunity cost of
money and leads to a decrease
in the quantity of money
demanded.
e. does not have any effect on the
quantity of money demanded.
In the speculative demand for money, the
interest rate represents the opportunity
cost of holding money. Thus, a decrease
in the interest rate indicates that the
opportunity cost of holding money is low.
Because there is a negative relationship
between the interest and the quantity of
money demanded, a decrease in the
interest rate will result in an increase in
the quantity of money.
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