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ECS1601: Economics IB (Macroeconomics I)
OCT/NOV Examination 2026 Preparation
Covering Past Papers: 2023 – 2024 – 2025
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
Economic & Management Sciences — University of South Africa (UNISA)
Exam Revision Guide
ECS1601
Module Code:
Economics IB (Macroeconomics I)
Module Name:
OCT/NOV 2023, 2024 & 2025
Papers Covered:
OCT/NOV 2026
Target Exam:
Learning Units 1–8 (All Topics)
Coverage:
100 Marks per Paper
Total Marks:
Use this guide to revise thoroughly. Focus on understanding, not memorisation.
Practise calculations with a calculator.
Exam Revision Notes | ECS1601 | 2026
,ECS1601 | Exam Revision OCT/NOV 2023–2025
Module Overview & Exam Format
Key Concept
ECS1601 – Economics IB (Macroeconomics I) is a year module offered by the
Department of Economics at UNISA. The exam consists of 60 MCQ questions, each
worth 1 23 marks, totalling 100 marks. The exam is sat online. A calculator may be
used where calculations are required.
Learning Units Covered:
• LU1: Interdependence of major sectors – the circular flow model
• LU2: Measuring production, income and spending (National Accounts / GDP)
• LU3: Measuring prices and unemployment; fiscal policy overview
• LU4: Money, banking and the monetary sector
• LU5: Monetary policy and the SARB
• LU6: The Keynesian model – private sector (two-sector)
• LU7: The Keynesian model – government and foreign sector (four-sector)
• LU8: The balance of payments, foreign exchange and international trade
Page 2 of 35
,ECS1601 | Exam Revision OCT/NOV 2023–2025
OCT/NOV 2023 – Section A: Circular Flow of Income (LU1) [Based on LU1]
Question 1 Conceptual
Question: In the goods market of the circular flow model, which of the following is
correct?
(A) Firms buy finished products from households
(B) Consumers buy factors of production from firms
(C) Firms sell finished products to households
(D) Firms buy factors of production from consumers
Answer: (C) – Firms sell finished products to households.
In the goods (product) market, households use income earned in the factor market to pur-
chase finished goods and services from firms. The goods market is therefore characterised by
households spending (consumption) and firms supplying output.
Key Concept
The circular flow model shows two distinct markets:
• Factor (resource) market: Households supply labour, capital, land and en-
trepreneurship to firms; firms pay wages, interest, rent and profit in return.
• Goods (product) market: Firms supply finished goods and services; households
pay for them with consumption expenditure.
Question 2 Conceptual
Question: Which of the following transactions occurs in the factor market?
(A) A student buys lunch at a local university cafeteria
(B) The South African Defence Force buys a helicopter from a manufacturer
(C) A household purchases a new television set
(D) A clothing firm hires a new sewing machinist and pays her a monthly salary
Answer: (D) – The payment of a salary is a factor market transaction because labour (a
factor of production) is bought and sold.
Page 3 of 35
,ECS1601 | Exam Revision OCT/NOV 2023–2025
Exam Tip
The key test: Is the transaction about buying/selling a factor of production (labour,
capital, land)? If yes, it is a factor market transaction. Buying a finished product (TV,
helicopter, meal) belongs to the goods market.
Question 3 Conceptual/Calculation
Question: With reference to the four-sector circular flow model, identify the four main
flows associated with the government sector.
Answer:
The government interacts with all other sectors through four flows:
• Taxes (T): Leakage – households and firms pay taxes to the government (a withdrawal
from the circular flow).
• Government spending on goods and services (G): Injection – the government pur-
chases goods and services from firms.
• Transfer payments (TR): Injections from the government back to households (social
grants, unemployment benefits).
• Government borrowing: If G > T, the government borrows from the financial sector (a
leakage from financial sector savings).
Consumption (C)
Households Firms
Wages, Rent, Profit
Imports
Exports
Taxes Transfer pmts
Government Foreign Sector
G spending
Page 4 of 35
,ECS1601 | Exam Revision OCT/NOV 2023–2025
OCT/NOV 2023 – Section B: Measuring GDP (LU2) [Based on LU2]
Question 4 Calculation
Question: Use the data below (R millions) to calculate South Africa’s GDP using the
expenditure method:
Item R millions
Household consumption (C) 700
Government purchases (G) 200
Gross private investment (I) 600
Exports (X) 200
Imports (M) 500
Intermediate goods and services 300
Which method should be applied, and what is the GDP value?
Answer:
The Expenditure Method (also called the spending approach) sums all final expenditures:
GDP = C + I + G + (X − M )
GDP = 700 + 600 + 200 + (200 − 500)
GDP = 700 + 600 + 200 + (−300)
GDP = R1,200 million
Note: Intermediate goods and services are excluded to avoid double counting; only final
goods and services are counted.
Page 5 of 35
, ECS1601 | Exam Revision OCT/NOV 2023–2025
Exam Tip
Always subtract imports (M) from exports (X) to obtain net exports (NX). A trade
deficit means NX is negative and reduces GDP. Intermediate goods are never added in
the expenditure method.
Question 5 Conceptual
Question: Which of the following statements about the income method of calculating
GDP is correct?
(A) It sums all final expenditures on goods and services
(B) It adds together all factor incomes – wages, rent, interest and profit
(C) It counts the value added at each stage of production
(D) It uses consumer price indices to deflate nominal output
Answer: (B)
The income method sums the payments made to all factors of production:
• Wages (W): Compensation to labour
• Rent (R): Payments for use of land/natural resources
• Interest (i): Payments for use of capital
• Profit (π): Entrepreneurs’ residual income
GDP (Income) = W + R + i + π
Question 6 Conceptual
Question: What is the difference between nominal GDP and real GDP, and why is
real GDP preferred for comparing economic growth over time?
Answer:
• Nominal GDP: Measures the market value of all final goods and services at current
prices (prices of the period in question). It can increase simply because prices have risen –
not because more was produced.
Page 6 of 35
]]
ECS1601: Economics IB (Macroeconomics I)
OCT/NOV Examination 2026 Preparation
Covering Past Papers: 2023 – 2024 – 2025
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
Economic & Management Sciences — University of South Africa (UNISA)
Exam Revision Guide
ECS1601
Module Code:
Economics IB (Macroeconomics I)
Module Name:
OCT/NOV 2023, 2024 & 2025
Papers Covered:
OCT/NOV 2026
Target Exam:
Learning Units 1–8 (All Topics)
Coverage:
100 Marks per Paper
Total Marks:
Use this guide to revise thoroughly. Focus on understanding, not memorisation.
Practise calculations with a calculator.
Exam Revision Notes | ECS1601 | 2026
,ECS1601 | Exam Revision OCT/NOV 2023–2025
Module Overview & Exam Format
Key Concept
ECS1601 – Economics IB (Macroeconomics I) is a year module offered by the
Department of Economics at UNISA. The exam consists of 60 MCQ questions, each
worth 1 23 marks, totalling 100 marks. The exam is sat online. A calculator may be
used where calculations are required.
Learning Units Covered:
• LU1: Interdependence of major sectors – the circular flow model
• LU2: Measuring production, income and spending (National Accounts / GDP)
• LU3: Measuring prices and unemployment; fiscal policy overview
• LU4: Money, banking and the monetary sector
• LU5: Monetary policy and the SARB
• LU6: The Keynesian model – private sector (two-sector)
• LU7: The Keynesian model – government and foreign sector (four-sector)
• LU8: The balance of payments, foreign exchange and international trade
Page 2 of 35
,ECS1601 | Exam Revision OCT/NOV 2023–2025
OCT/NOV 2023 – Section A: Circular Flow of Income (LU1) [Based on LU1]
Question 1 Conceptual
Question: In the goods market of the circular flow model, which of the following is
correct?
(A) Firms buy finished products from households
(B) Consumers buy factors of production from firms
(C) Firms sell finished products to households
(D) Firms buy factors of production from consumers
Answer: (C) – Firms sell finished products to households.
In the goods (product) market, households use income earned in the factor market to pur-
chase finished goods and services from firms. The goods market is therefore characterised by
households spending (consumption) and firms supplying output.
Key Concept
The circular flow model shows two distinct markets:
• Factor (resource) market: Households supply labour, capital, land and en-
trepreneurship to firms; firms pay wages, interest, rent and profit in return.
• Goods (product) market: Firms supply finished goods and services; households
pay for them with consumption expenditure.
Question 2 Conceptual
Question: Which of the following transactions occurs in the factor market?
(A) A student buys lunch at a local university cafeteria
(B) The South African Defence Force buys a helicopter from a manufacturer
(C) A household purchases a new television set
(D) A clothing firm hires a new sewing machinist and pays her a monthly salary
Answer: (D) – The payment of a salary is a factor market transaction because labour (a
factor of production) is bought and sold.
Page 3 of 35
,ECS1601 | Exam Revision OCT/NOV 2023–2025
Exam Tip
The key test: Is the transaction about buying/selling a factor of production (labour,
capital, land)? If yes, it is a factor market transaction. Buying a finished product (TV,
helicopter, meal) belongs to the goods market.
Question 3 Conceptual/Calculation
Question: With reference to the four-sector circular flow model, identify the four main
flows associated with the government sector.
Answer:
The government interacts with all other sectors through four flows:
• Taxes (T): Leakage – households and firms pay taxes to the government (a withdrawal
from the circular flow).
• Government spending on goods and services (G): Injection – the government pur-
chases goods and services from firms.
• Transfer payments (TR): Injections from the government back to households (social
grants, unemployment benefits).
• Government borrowing: If G > T, the government borrows from the financial sector (a
leakage from financial sector savings).
Consumption (C)
Households Firms
Wages, Rent, Profit
Imports
Exports
Taxes Transfer pmts
Government Foreign Sector
G spending
Page 4 of 35
,ECS1601 | Exam Revision OCT/NOV 2023–2025
OCT/NOV 2023 – Section B: Measuring GDP (LU2) [Based on LU2]
Question 4 Calculation
Question: Use the data below (R millions) to calculate South Africa’s GDP using the
expenditure method:
Item R millions
Household consumption (C) 700
Government purchases (G) 200
Gross private investment (I) 600
Exports (X) 200
Imports (M) 500
Intermediate goods and services 300
Which method should be applied, and what is the GDP value?
Answer:
The Expenditure Method (also called the spending approach) sums all final expenditures:
GDP = C + I + G + (X − M )
GDP = 700 + 600 + 200 + (200 − 500)
GDP = 700 + 600 + 200 + (−300)
GDP = R1,200 million
Note: Intermediate goods and services are excluded to avoid double counting; only final
goods and services are counted.
Page 5 of 35
, ECS1601 | Exam Revision OCT/NOV 2023–2025
Exam Tip
Always subtract imports (M) from exports (X) to obtain net exports (NX). A trade
deficit means NX is negative and reduces GDP. Intermediate goods are never added in
the expenditure method.
Question 5 Conceptual
Question: Which of the following statements about the income method of calculating
GDP is correct?
(A) It sums all final expenditures on goods and services
(B) It adds together all factor incomes – wages, rent, interest and profit
(C) It counts the value added at each stage of production
(D) It uses consumer price indices to deflate nominal output
Answer: (B)
The income method sums the payments made to all factors of production:
• Wages (W): Compensation to labour
• Rent (R): Payments for use of land/natural resources
• Interest (i): Payments for use of capital
• Profit (π): Entrepreneurs’ residual income
GDP (Income) = W + R + i + π
Question 6 Conceptual
Question: What is the difference between nominal GDP and real GDP, and why is
real GDP preferred for comparing economic growth over time?
Answer:
• Nominal GDP: Measures the market value of all final goods and services at current
prices (prices of the period in question). It can increase simply because prices have risen –
not because more was produced.
Page 6 of 35
