ECS 1601 ASSIGNMENT 1

Unique number : Closing Date : 21 August 2020 1.1 The three major flows in any economy are … [1] income, spending and saving. [2] income, government spending and consumption. [3] spending, production and investment. [4] production, income and spending. These are the flows that are discussed in the circular flow model. 1.2 The two major markets in the circular flow of income and expenditure are the … [1] foreign exchange market and factor market. [2] goods market and factor market. [3] goods market and services market. [4] factor market and production market. These are the two markets the goods market is where households purchase goods and services, whilst the Factor market is owned by households who sell factors of productions to firms. 1.3 Which one of the following statements on the remuneration of the factors of production is true? [1] The remuneration for capital is profit, as the business aims to earn a profit on its financial investments. [2] The remuneration for labour is rent, as workers are able to pay their rent with the money they earn. [3] The remuneration for entrepreneurship is a salary, as entrepreneurs are also rewarded for their efforts. [4] The remuneration for natural resources is rent, as natural resources consist of all gifts of nature. The following are different Factors of production and their rewards Natural resources (Land) rent Capital Interest Labour Wages /Salary Entrepreneurship Profit 1.4 In the circular flow of income and spending in South Africa, _____________ firms in the factor market becomes __________ households, while ____________ households in the goods market becomes ______________ firms. Expenditure by foreigners on South African products constitutes _______________ the circular flow. This study source was downloaded by from CourseH on :15:26 GMT -05:00 This study resource was shared via CourseH [1] income to; spending by; income to; spending by; a leakage from [2] income to; income to; spending by; spending by; an injection into [3] spending by; income to; spending by; income to; an injection into [4] spending by; spending by; income to; income to; a leakage from It is apparent that households own the factors of production hence they sell these factors to firms and get income whilst the firm’s own businesses which make goods and services which provide income to firms. Foreign sector buying from SA is an advantage it injects more money (Exports). 1.5 In the circular flow of income and spending, financial institutions … [1] act as an intermediary between those who have surplus funds and those who have deficit funds. [2] are not always useful, as households generally spend all their available funds. [3] create an inj