ECS1601 EXAM PREPARATION 2026 EXAM
PAPER FINAL QUESTIONS AND FULL
SOLUTIONS
◉ The equilibrium level of income is ...
[1] 195
[2] 312
[3] 156
[4] 273. Answer: [1] 195
◉ Zihle's monthly disposable income increases from R4 900 to R5
300. As a result, his monthly savings increase from R510 to R670.
This implies that his marginal propensity to consume
is ...
[1] 0,20
[2] 0,40
[3] 0,60
[4] 0,80. Answer: [3] 0,60
◉ If the multiplier is 4, a R40 billion increase in net exports will ...
,[1] increase GDP by 160 billion
[2] increase GDP by 40 billion
[3] increase GDP by 10 billion
[4] the multiplier does not have an effect on net exports. Answer: [1]
increase GDP by 160 billion
◉ Use the figure below to answer question 3.19.
The movement from X to X' can result from ...
[1] a depreciation of the rand against the dollar.
[2] an appreciation of the rand against the dollar.
[3] an increase in domestic income.
[4] a decrease in domestic income.. Answer: [1] a depreciation of the
rand against the dollar.
◉ The multiplier for a Keynesian model with a foreign sector is _____
the multiplier of a Keynesian model without a foreign sector.
a) lower than
b) higher than
,c) same as
[1] a is correct
[2] b is correct
[3] c is correct
[4] all of them are correct. Answer: [1] a is correct
◉ In the Keynesian model, when the tax rate increases...
[1] the multiplier increases.
[2] the equilibrium level of income increases.
[3] net exports increase.
[4] the equilibrium level of income decreases.. Answer: [4] the
equilibrium level of income decreases.
◉ Fiscal policy includes ...
[1] policy on government spending on official travel allowances of
politicians
[2] policy on consumption taxes such as those on cigarettes
[3] policy on salaries paid to government employees and politicians
, [4] all the policies set out in statements [1] to [3] above. Answer: [4]
all the policies set out in statements [1] to [3] above
◉ Which one of the following is correct regarding contractionary
fiscal policy in the Keynesian
model? It will...
[1] decrease inventories
[2] increase inventories
[3] increase investment
[4] decrease investment. Answer: [2] increase inventories
◉ Which of the following is correct about an increase in interest rate
in the Keynesian model?
[1] increase price levels
[2] decrease price levels
[3] increase investment
[4] decrease investment. Answer: [4] decrease investment
◉ Use the figure below to answer questions 3.25 to 3.26.
PAPER FINAL QUESTIONS AND FULL
SOLUTIONS
◉ The equilibrium level of income is ...
[1] 195
[2] 312
[3] 156
[4] 273. Answer: [1] 195
◉ Zihle's monthly disposable income increases from R4 900 to R5
300. As a result, his monthly savings increase from R510 to R670.
This implies that his marginal propensity to consume
is ...
[1] 0,20
[2] 0,40
[3] 0,60
[4] 0,80. Answer: [3] 0,60
◉ If the multiplier is 4, a R40 billion increase in net exports will ...
,[1] increase GDP by 160 billion
[2] increase GDP by 40 billion
[3] increase GDP by 10 billion
[4] the multiplier does not have an effect on net exports. Answer: [1]
increase GDP by 160 billion
◉ Use the figure below to answer question 3.19.
The movement from X to X' can result from ...
[1] a depreciation of the rand against the dollar.
[2] an appreciation of the rand against the dollar.
[3] an increase in domestic income.
[4] a decrease in domestic income.. Answer: [1] a depreciation of the
rand against the dollar.
◉ The multiplier for a Keynesian model with a foreign sector is _____
the multiplier of a Keynesian model without a foreign sector.
a) lower than
b) higher than
,c) same as
[1] a is correct
[2] b is correct
[3] c is correct
[4] all of them are correct. Answer: [1] a is correct
◉ In the Keynesian model, when the tax rate increases...
[1] the multiplier increases.
[2] the equilibrium level of income increases.
[3] net exports increase.
[4] the equilibrium level of income decreases.. Answer: [4] the
equilibrium level of income decreases.
◉ Fiscal policy includes ...
[1] policy on government spending on official travel allowances of
politicians
[2] policy on consumption taxes such as those on cigarettes
[3] policy on salaries paid to government employees and politicians
, [4] all the policies set out in statements [1] to [3] above. Answer: [4]
all the policies set out in statements [1] to [3] above
◉ Which one of the following is correct regarding contractionary
fiscal policy in the Keynesian
model? It will...
[1] decrease inventories
[2] increase inventories
[3] increase investment
[4] decrease investment. Answer: [2] increase inventories
◉ Which of the following is correct about an increase in interest rate
in the Keynesian model?
[1] increase price levels
[2] decrease price levels
[3] increase investment
[4] decrease investment. Answer: [4] decrease investment
◉ Use the figure below to answer questions 3.25 to 3.26.
