ECS1601 ASSIGNMENT 7 ALTERNATIVE STUDY
GUIDE 2026 COMPLETE ANSWERS AND
SOLUTIONS || 100% GUARANTEED PASS
<RECENT VERSION>
1. The recurring fluctuations in real GDP around its long-term
potential growth path are known as the:
A) Inflation spiral
B) Economic growth trend
C) Business cycle
D) Exchange rate cycle
2. During the contraction phase of a business cycle, one would
typically expect:
A) Rising inflation and falling unemployment
B) Falling real GDP and rising unemployment
C) Rising interest rates and increased investment
D) A budget surplus and trade deficit
3. A leading economic indicator is one that:
A) Changes after the economy as a whole has changed.
B) Moves at the same time as the overall economy.
C) Changes before the economy as a whole changes.
D) Is used to measure long-term economic growth.
4. The unemployment that results from the time it takes for workers
to search for new jobs that match their skills is called:
A) Cyclical unemployment
B) Structural unemployment
,C) Frictional unemployment
D) Seasonal unemployment
5. If the Consumer Price Index (CPI) rises from 100 to 105 in a year, the
inflation rate is:
A) 10%
B) 5%
C) 105%
D) 2%
6. The type of inflation caused by an increase in the cost of production
(e.g., higher oil prices) is:
A) Demand-pull inflation
B) Cost-push inflation
C) Hyperinflation
D) Stagflation
7. Stagflation is characterized by:
A) High inflation and high economic growth
B) Low inflation and low unemployment
C) High inflation and high unemployment
D) Deflation and economic expansion
8. The phase of the business cycle where economic activity is at its
highest point is called the:
A) Trough
B) Recession
C) Expansion
D) Peak
, 9. The natural rate of unemployment includes:
A) Only cyclical unemployment
B) Frictional and structural unemployment
C) Only frictional unemployment
D) Cyclical and seasonal unemployment
10. If the nominal GDP is R1,000 billion and the GDP deflator is 125,
the real GDP is:
A) R1,250 billion
B) R800 billion
C) R125 billion
D) R875 billion
11. The misery index is calculated as the sum of the:
A) Interest rate and the inflation rate
B) Unemployment rate and the inflation rate
C) Budget deficit and the trade deficit
D) Tax rate and the unemployment rate
12. Discouraged workers who have stopped looking for work are
classified as:
A) Frictionally unemployed
B) Structurally unemployed
C) Not in the labour force
D) Cyclically unemployed
13. An example of a pro-cyclical variable is:
A) Unemployment
B) Government tax revenue
GUIDE 2026 COMPLETE ANSWERS AND
SOLUTIONS || 100% GUARANTEED PASS
<RECENT VERSION>
1. The recurring fluctuations in real GDP around its long-term
potential growth path are known as the:
A) Inflation spiral
B) Economic growth trend
C) Business cycle
D) Exchange rate cycle
2. During the contraction phase of a business cycle, one would
typically expect:
A) Rising inflation and falling unemployment
B) Falling real GDP and rising unemployment
C) Rising interest rates and increased investment
D) A budget surplus and trade deficit
3. A leading economic indicator is one that:
A) Changes after the economy as a whole has changed.
B) Moves at the same time as the overall economy.
C) Changes before the economy as a whole changes.
D) Is used to measure long-term economic growth.
4. The unemployment that results from the time it takes for workers
to search for new jobs that match their skills is called:
A) Cyclical unemployment
B) Structural unemployment
,C) Frictional unemployment
D) Seasonal unemployment
5. If the Consumer Price Index (CPI) rises from 100 to 105 in a year, the
inflation rate is:
A) 10%
B) 5%
C) 105%
D) 2%
6. The type of inflation caused by an increase in the cost of production
(e.g., higher oil prices) is:
A) Demand-pull inflation
B) Cost-push inflation
C) Hyperinflation
D) Stagflation
7. Stagflation is characterized by:
A) High inflation and high economic growth
B) Low inflation and low unemployment
C) High inflation and high unemployment
D) Deflation and economic expansion
8. The phase of the business cycle where economic activity is at its
highest point is called the:
A) Trough
B) Recession
C) Expansion
D) Peak
, 9. The natural rate of unemployment includes:
A) Only cyclical unemployment
B) Frictional and structural unemployment
C) Only frictional unemployment
D) Cyclical and seasonal unemployment
10. If the nominal GDP is R1,000 billion and the GDP deflator is 125,
the real GDP is:
A) R1,250 billion
B) R800 billion
C) R125 billion
D) R875 billion
11. The misery index is calculated as the sum of the:
A) Interest rate and the inflation rate
B) Unemployment rate and the inflation rate
C) Budget deficit and the trade deficit
D) Tax rate and the unemployment rate
12. Discouraged workers who have stopped looking for work are
classified as:
A) Frictionally unemployed
B) Structurally unemployed
C) Not in the labour force
D) Cyclically unemployed
13. An example of a pro-cyclical variable is:
A) Unemployment
B) Government tax revenue
