ECS2602 Assesment 2 Macroeconomics
The term “full employment” refers to a situation in the economy …
Select one:
A.
in which there is only frictional and structural unemployment.
B.
where everybody who wants to work is employed.
C.
in which there is only cyclical unemployment and fric...
The term “full employment” refers to a situation in the economy …
Select one:
A.
in which there is only frictional and structural unemployment.
B.
where everybody who wants to work is employed.
C.
in which there is only cyclical unemployment and frictional unemployment.
D.
where there is no unemployment in the economy.
Feedback
Your answer is incorrect. Given the different types of unemployment, frictional
unemployment always exists due to normal labour market turnover where workers
change jobs and are considered voluntary unemployment. Structural unemployment is
more long-term unemployment, and it is slow to fix as it is linked to the changing
structure of the economy that requires either migration or re-training of the workers.
Therefore, the term full employment refers to a situation in the economy in which there
is no cyclical (or demand-deficient) unemployment.
The correct answer is:
in which there is only frictional and structural unemployment.
Question 2
Correct
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Question text
Which one of the following statements is correct regarding the IS-LM model?
Select one:
A.
A change in government spending only influences the goods market and has no impact
on the financial market.
B.
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The initial impact of a change in taxation is on the financial market since the interest rate
will be affected.
C.
If the consumer confidence in the economy worsens, the impact will be first on the
financial market and then on the goods market.
D.
The initial impact of a change in the interest rate is on the financial market, after which it
influences the goods market.
Feedback
Your answer is correct. The first thing you must identify is on which market the initial
impact is felt. Your starting point is the events in this initial market, which will
eventually spill over into the other market. The initial impact of a change in taxation is
on the goods market and then on the financial market. The first impact of a change in
government spending is on the goods market, where it influences several variables,
which eventually affect the financial market. If the consumer confidence in the economy
worsens, the impact will be first on the goods market and then on the financial market.
The correct answer is:
The initial impact of a change in the interest rate is on the financial market, after which it
influences the goods market.
Question 3
Incorrect
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Question text
This question is based on the following comparison between the impact of
an expansionary fiscal policy with a contractionary monetary policy in the
IS-LM model:
Expansionary Contractionary
fiscal policy monetary policy
The demand for goods Higher Lower
The level of output and income Higher Lower
The interest rate Unchanged Higher
The reason for the higher quantity of money demand and the quantity of
money for an expansionary fiscal policy is that the while for a
contractionary monetary policy it is lower since the .
Select one:
A.
level of output and income is higher; level of output and income is lower
B.
level of output and income is lower; level of output and income is higher
C.
interest rate is unchanged; interest rate is higher
D.
investment spending is higher; investment spending is lower
Feedback
Your answer is incorrect. A positive relationship exists between the level of output and
income and the quantity demand for money and the quantity for money. In the case of
an expansionary fiscal policy, the level of output and income is higher (Y↑ → Md↑ → M↑).
In the case of contractionary monetary policy, the level of output and income is lower (Y↓
→ Md↓ → M↓).
The correct answer is:
level of output and income is higher; level of output and income is lower
Question 4
Incorrect
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Question text
In this module, we follow the to derive the LM curve that means that the
.
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