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ECS2602 - Macroeconomics ASSESSMENT 2 SEM 2 OF 2024 EXPECTED QUESTIONS AND ANSWERS
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This question is based on the diagram below:Which one of the following statements is INCORRECT?
Select one:
A. The IS curve will shift from IS1 to IS because of decreased government spending, autonomous consumption or autonomous
investment.
B. The IS curve will shift from IS to IS1 because of an increase in consumer confidence.
C. The IS curve will shift from IS1 to IS because of a decrease in any of the autonomous factors that change the demand for goods.
D. The IS curve will shift from IS to IS1 because of a decrease in the tax rate.
Clear my choice
Question 6
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Which one of the following factors will NOT cause a shift of the IS curve to the right?
Select one:
A. an increase in the quantity of money.
B. an increase in government spending.
C. improved consumer confidence.
D. a decrease in the tax rate.
Clear my choice
◄ Assessment 1
, To derive the LM-curve …
Select one:
A. the central bank set the interest rate to determine the effect on the level of output and income.
B. the central bank changes the quantity of money to determine the effect on the demand for goods and output and income level.
C. we change government spending to determine the effect on the level of output and income.
D. the central bank changes the demand for money to influence the interest rate to determine the effect on the level of output and income.
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Question 4
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Study the following diagram and answer the question.
Which one of the following statements is correct?
The above diagram illustrates the following events in the economy:
Select one:
A. T↓ → YD↓ → C↓ → Z↓ → Y↓
B. T↑ → YD↓ → C↓ → Z↓ → Y↓
C. G↑ → Z↑ → Y↑
D. G↓ → YD↓ → C↓ → Z↓ → Y↓
Clear my choice
◄ Assessment 1
, Which one of the following statements is INCORRECT?
Select one:
A. When firms increase their spending on capital goods, it implies that the expected return rate of
these investment projects is higher than the market interest rate.
B. When we introduce investment as an endogenous variable to our goods market model our
equilibrium equation changes from Y = Z = c0 + c(Y – T) + Ī + G to
Y = Z = c0 + c(Y – T) + I(Y,i) + G.
C. In the goods market model, investment spending is regarded as an autonomous variable, but
according to our analysis in the IS-LM model, the investment function will change from I = Ī to I
= I(Y, i).
D. Consumption is a positive function of the level of output and income, whereas investment is a
positive function of the level of output and income and the interest rate.
Clear my choice
Question 2
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If government spending decreases, what would be the impact on the interest rate in the IS-LM model?
Select one:
A. The interest rate will decrease.
B. The interest rate will increase.
C. The interest rate is unchanged.
D. The interest rate will first increase, then decrease.
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