ECS1601 Assignment 2 2025 – Verified
Answers and Full Solutions
University of South Africa – Economics IB (Macroeconomics I)
July 6, 2025
, ECS1601 Assignment 2 2025
1 100 Questions and Answers
Below are 100 revised exam-style questions and answers for ECS1601 Assignment 2, Semester
2, 2025, covering macroeconomics topics from the UNISA curriculum, including circular flow,
national income, money markets, inflation, unemployment, and policy analysis.
1.1 Q1: What is macroeconomics?
Answer: The study of economy-wide phenomena, such as GDP, inflation, unemployment,
and economic policies, focusing on aggregates rather than individual markets.
1.2 Q2: What is the circular flow model?
Answer: A diagram illustrating the flow of goods, services, and money among households,
firms, government, financial sector, and foreign sector.
1.3 Q3: Which is an injection in the circular flow?
Answer: Government spending (G), which increases income flow by adding expenditure to
the economy.
1.4 Q4: How does savings act in the circular flow?
Answer: Savings is a leakage, reducing spending and aggregate demand unless offset by
investment.
1.5 Q5: What is the formula for GDP using the expenditure approach?
Answer: GDP = C + I + G + (X – Z), where C is consumption, I is investment, G is government
spending, X is exports, and Z is imports.
1.6 Q6: What distinguishes real GDP from nominal GDP?
Answer: Real GDP adjusts for inflation using constant prices; nominal GDP uses current
prices.
1.7 Q7: How does an increase in taxes affect the circular flow?
Answer: Taxes are a leakage, reducing disposable income and consumption, thus decreasing
aggregate demand.
1.8 Q8: What is the production approach to GDP?
Answer: GDP = Value of output – Intermediate consumption, summing value added across
sectors.
1
Answers and Full Solutions
University of South Africa – Economics IB (Macroeconomics I)
July 6, 2025
, ECS1601 Assignment 2 2025
1 100 Questions and Answers
Below are 100 revised exam-style questions and answers for ECS1601 Assignment 2, Semester
2, 2025, covering macroeconomics topics from the UNISA curriculum, including circular flow,
national income, money markets, inflation, unemployment, and policy analysis.
1.1 Q1: What is macroeconomics?
Answer: The study of economy-wide phenomena, such as GDP, inflation, unemployment,
and economic policies, focusing on aggregates rather than individual markets.
1.2 Q2: What is the circular flow model?
Answer: A diagram illustrating the flow of goods, services, and money among households,
firms, government, financial sector, and foreign sector.
1.3 Q3: Which is an injection in the circular flow?
Answer: Government spending (G), which increases income flow by adding expenditure to
the economy.
1.4 Q4: How does savings act in the circular flow?
Answer: Savings is a leakage, reducing spending and aggregate demand unless offset by
investment.
1.5 Q5: What is the formula for GDP using the expenditure approach?
Answer: GDP = C + I + G + (X – Z), where C is consumption, I is investment, G is government
spending, X is exports, and Z is imports.
1.6 Q6: What distinguishes real GDP from nominal GDP?
Answer: Real GDP adjusts for inflation using constant prices; nominal GDP uses current
prices.
1.7 Q7: How does an increase in taxes affect the circular flow?
Answer: Taxes are a leakage, reducing disposable income and consumption, thus decreasing
aggregate demand.
1.8 Q8: What is the production approach to GDP?
Answer: GDP = Value of output – Intermediate consumption, summing value added across
sectors.
1
