Exam (elaborations)
ECS2602 ASSESSMENT 3 SEMESTER 2 2023 EXPECTED QUESTIONS AND ANSWERS
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ECS2602 ASSESSMENT 3 SEMESTER 2 2023 EXPECTED QUESTIONS AND ANSWERS
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Which one of the following statements is CORRECT?At the new equilibrium point a2 …
Select one:
A. output is the same as it was before fiscal consolidation, taxes are lower, consumption is
back to the initial level, and investment spending is higher since r↓ → I↑ → Z↑ → Y↑ and Y↑ → I↑.
B. output is the same as it was before fiscal consolidation, taxes are higher, consumption is
lower than the initial level, and investment spending is higher since r↓ → I↑ → Z↑ → Y↑ and Y↑
→ I↑.
C. output is the same as it was before fiscal consolidation, taxes are lower, consumption is
higher, and investment spending is higher since r↓ → I↑ → Z↑ → Y↑ and Y↑ → I↑.
D. output is the same as it was before fiscal consolidation, taxes are higher, consumption is
back to the initial level, and investment spending is lower since r↑ → I↓ → Z↓ → Y↓ and Y↓ → I↓.
,What happens to the following variables as the economy moves from a1 to a2 on the IS-LM-
PC model?
Choose the INCORRECT statement.
Select one:
A. Investment spending will increase since the policy rate decreases.
B. Consumption spending will increase.
C. Unemployment will decrease, and the level of output will increase.
D. Taxes will increase.
, Study the diagram below and answer the question.
What happens to the following variables as the economy moves from a1 to a2 on the IS-
LM-PC model? Choose the INCORRECT statement.
Select one:
A. Investment spending will increase, and the demand for goods will increase.
B. Taxes will increase.
C. Consumption spending will increase.
D. The policy rate will decrease.
What happens to the following variables as the economy moves from a1 to a2 on the IS-LM-
PC model?
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