UNISA 2024 ECS2602-24-S1 Welcome to the module ECS2602-24-S1 Assessment 3
QUIZ
Started on Thursday, 11 April 2024, 9:07 PM
State Finished
Completed on Wednesday, 17 April 2024, 10:30 PM
Time taken 6 days 1 hour
Marks 17.00/30.00
Grade 56.67 out of 100.00
Question 1
Incorrect
Mark 0.00 out of 1.00
Which of the following statements is INCORRECT?
If the interest rate increases in SA relative to the interest rate in the rest of the world, ceteris paribus, it leads to _____
Select one:
A. a decrease in the attractiveness of SA bonds.
B. an appreciation of the rand. This statement is correct.
C. a capital inflow of funds into SA from the rest of the world.
D. a higher demand for rands on the foreign exchange market.
Your answer is incorrect.
The correct answer is:
a decrease in the attractiveness of SA bonds.
,Question 2
Correct
Mark 1.00 out of 1.00
Which one of the following chain of events indicates the impact of an appreciation of the nominal exchange rate on demand
for goods and the level of output and income in the goods market for an open economy?
Select one:
A. E↑ → X↓ → NX↑ → Z↓ → Y↓
B. E↑ → IM↑ → NX↓ → Z↓ → Y↓
C. E↑ → IM↓ → NX↑ → Z↑ → Y↑
D. i↑ → E↑ → X↓ → Z↓ → Y↓
Your answer is correct. The question refers to the impact of an appreciation; therefore, the chain of events will start with an
appreciation in the exchange rate. The appreciation of the nominal exchange rate will lead to an increase in imports that will
deteriorate the trade balance, the demand for goods and the level of output and income decrease.
The correct answer is:
E↑ → IM↑ → NX↓ → Z↓ → Y↓
Question 3
Incorrect
Mark 0.00 out of 1.00
Which one of the following statements is INCORRECT regarding the IS and LM relations in an open economy?
Select one:
A. The interest parity relation shows (given i*, Ēe) the following relationship: i↑ → E↑ and i↓ → E↓.
B. An increase in the interest rate has a negative impact on the exchange rate.
C. Given the domestic interest rate and the interest parity relation, the equilibrium interest rate determines the
equilibrium exchange rate.
D. The LM relation is the same in an open and closed economy and is a horizontal This statement is
line. correct.
Your answer is incorrect.
The correct answer is:
An increase in the interest rate has a negative impact on the exchange rate.
,Question 4
Correct
Mark 1.00 out of 1.00
This question is based on the following diagram of an IS-LM model for an open economy:
Which one of the following statements is INCORRECT?
The above diagram can illustrate _____.
Select one:
A. an increase in taxes and the impact on the exchange rate.
B. a decrease in government spending and the impact on the exchange rate.
C. the impact of contractionary fiscal policy on the level of output and income in an open economy.
D. an increase in This statement is the only INCORRECT statement. A budget deficit occurs when the
the budget government spending is greater than government income (taxes). If government spending
deficit and the decreases and/or taxes increase (implementation of a contractionary fiscal policy), it
impact on the implies that the budget deficit will decrease (and will not increase).
exchange rate.
Your answer is correct.
The correct answer is:
an increase in the budget deficit and the impact on the exchange rate.
, Question 5
Correct
Mark 1.00 out of 1.00
Study the following diagram and answer the question.
Which of the following statements is INCORRECT?
Assume that the shift of the IS curve to the left is because of a decrease in government spending since the budget deficit is
too high. If government spending decreases without a decrease in the interest rate ____
Select one:
A. the new equilibrium level of output and income is now Y1, consumption spending and investment spending have
decreased, and the exchange rate is unchanged.
B. investment spending has decreased because the level of output and income has decreased, and a positive
relationship exists between Y and I.
C. the new equilibrium This statement is the only INCORRECT statement. The initial equilibrium level of
level of output and output and income is Y, where the IS curve and the LM curve intersect. Suppose
income is now Y1, government spending decreases, the IS curve shifts to the left to IS1. Without a
consumption spending change in the interest rate, the new equilibrium level of output and income is now Y1,
and investment consumption spending has decreased (Y↓ → YD↓ → C↓), investment spending has
spending have decreased (Y↓ → I↓), and the exchange rate is unchanged since the interest rate does
decreased, and the not change.
exchange rate has
depreciated.
D. consumption spending is lower since the level of output and income is lower, and disposable income is lower.
Your answer is correct.
The correct answer is:
the new equilibrium level of output and income is now Y1, consumption spending and investment spending have decreased,
and the exchange rate has depreciated.
QUIZ
Started on Thursday, 11 April 2024, 9:07 PM
State Finished
Completed on Wednesday, 17 April 2024, 10:30 PM
Time taken 6 days 1 hour
Marks 17.00/30.00
Grade 56.67 out of 100.00
Question 1
Incorrect
Mark 0.00 out of 1.00
Which of the following statements is INCORRECT?
If the interest rate increases in SA relative to the interest rate in the rest of the world, ceteris paribus, it leads to _____
Select one:
A. a decrease in the attractiveness of SA bonds.
B. an appreciation of the rand. This statement is correct.
C. a capital inflow of funds into SA from the rest of the world.
D. a higher demand for rands on the foreign exchange market.
Your answer is incorrect.
The correct answer is:
a decrease in the attractiveness of SA bonds.
,Question 2
Correct
Mark 1.00 out of 1.00
Which one of the following chain of events indicates the impact of an appreciation of the nominal exchange rate on demand
for goods and the level of output and income in the goods market for an open economy?
Select one:
A. E↑ → X↓ → NX↑ → Z↓ → Y↓
B. E↑ → IM↑ → NX↓ → Z↓ → Y↓
C. E↑ → IM↓ → NX↑ → Z↑ → Y↑
D. i↑ → E↑ → X↓ → Z↓ → Y↓
Your answer is correct. The question refers to the impact of an appreciation; therefore, the chain of events will start with an
appreciation in the exchange rate. The appreciation of the nominal exchange rate will lead to an increase in imports that will
deteriorate the trade balance, the demand for goods and the level of output and income decrease.
The correct answer is:
E↑ → IM↑ → NX↓ → Z↓ → Y↓
Question 3
Incorrect
Mark 0.00 out of 1.00
Which one of the following statements is INCORRECT regarding the IS and LM relations in an open economy?
Select one:
A. The interest parity relation shows (given i*, Ēe) the following relationship: i↑ → E↑ and i↓ → E↓.
B. An increase in the interest rate has a negative impact on the exchange rate.
C. Given the domestic interest rate and the interest parity relation, the equilibrium interest rate determines the
equilibrium exchange rate.
D. The LM relation is the same in an open and closed economy and is a horizontal This statement is
line. correct.
Your answer is incorrect.
The correct answer is:
An increase in the interest rate has a negative impact on the exchange rate.
,Question 4
Correct
Mark 1.00 out of 1.00
This question is based on the following diagram of an IS-LM model for an open economy:
Which one of the following statements is INCORRECT?
The above diagram can illustrate _____.
Select one:
A. an increase in taxes and the impact on the exchange rate.
B. a decrease in government spending and the impact on the exchange rate.
C. the impact of contractionary fiscal policy on the level of output and income in an open economy.
D. an increase in This statement is the only INCORRECT statement. A budget deficit occurs when the
the budget government spending is greater than government income (taxes). If government spending
deficit and the decreases and/or taxes increase (implementation of a contractionary fiscal policy), it
impact on the implies that the budget deficit will decrease (and will not increase).
exchange rate.
Your answer is correct.
The correct answer is:
an increase in the budget deficit and the impact on the exchange rate.
, Question 5
Correct
Mark 1.00 out of 1.00
Study the following diagram and answer the question.
Which of the following statements is INCORRECT?
Assume that the shift of the IS curve to the left is because of a decrease in government spending since the budget deficit is
too high. If government spending decreases without a decrease in the interest rate ____
Select one:
A. the new equilibrium level of output and income is now Y1, consumption spending and investment spending have
decreased, and the exchange rate is unchanged.
B. investment spending has decreased because the level of output and income has decreased, and a positive
relationship exists between Y and I.
C. the new equilibrium This statement is the only INCORRECT statement. The initial equilibrium level of
level of output and output and income is Y, where the IS curve and the LM curve intersect. Suppose
income is now Y1, government spending decreases, the IS curve shifts to the left to IS1. Without a
consumption spending change in the interest rate, the new equilibrium level of output and income is now Y1,
and investment consumption spending has decreased (Y↓ → YD↓ → C↓), investment spending has
spending have decreased (Y↓ → I↓), and the exchange rate is unchanged since the interest rate does
decreased, and the not change.
exchange rate has
depreciated.
D. consumption spending is lower since the level of output and income is lower, and disposable income is lower.
Your answer is correct.
The correct answer is:
the new equilibrium level of output and income is now Y1, consumption spending and investment spending have decreased,
and the exchange rate has depreciated.
