UNISA 2024 ECS1501-24-S2 Assessments Assessment 5
QUIZ
Started on Thursday, 19 September 2024, 1:23 PM
State Finished
Completed on Thursday, 19 September 2024, 2:24 PM
Time taken 49 mins 9 secs
Marks 20.00/20.00
Grade 100.00 out of 100.00
Started on Thursday, 19 September 2024, 1:23 PM
State Finished
Completed on Thursday, 19 September 2024, 2:24 PM
Time taken 49 mins 9 secs
Marks 20.00/20.00
Grade 100.00 out of 100.00
Question 1
Correct
Mark 1.00 out of 1.00
Suppose sanctions are imposed on a small open economy which leads to a decrease in autonomous imports. What will
happen to the aggregate expenditure curve if exports remain unchanged?
a. It will stay the same.
b. It will shift upwards.
c. It will shift downwards.
d. The slope becomes atter
If imposed sanctions would imply that there will be less autonomous imports (Z) into the country, this will increase net
exports (X-Z) at every income level, and therefore aggregate spending will increase at every income level. This will be
illustrated by a parallel upward shift of the aggregate expenditure curve. If imposed sanctions would imply that there will be
less autonomous imports (Z) into the country, this will increase net exports (X-Z) at every income level, and therefore
aggregate spending will increase at every income level. This will be illustrated by a parallel upward shift of the aggregate
expenditure curve.
, Question 2
Correct
Mark 1.00 out of 1.00
Suppose the government implements an expansionary scal policy to nance e-toll gantries. Required ∆Y = R1 000, the
marginal propensity to consume is 50% and the proportional tax rate is 40%. How much will government expenditure have to
change to reach the required change in equilibrium income?
a. R699
b. R800
c. R1 000
d. R1 200
Given that ∆Y= multiplier x ∆G. The required change in income is 1 000 and the multiplier is calculated as: The marginal
propensity to consume is 0,5 and proportional tax rate is 0,4. Therefore, the multiplier will be 1/ [1-c(1-t)] = 1/ [1-0,5(1-0,4)]
=1,43. Therefore, to calculate the change in government expenditure that will bring about an increase in G equal to 1 000:
ΔG=ΔY/α = 1 000/1,43 = 699. So for the government to change national income by 1 000, they will have to increase spending
by 699.
Question 3
Correct
Mark 1.00 out of 1.00
If the government wishes to reduce the flow of money in the circular flow of income and spending, it can ______.
a. increase government spending
b. increase the tax rate
c. increase investment spending
d. decrease the tax rate
To reduce money in the economy, the government can either reduce government spending or increase the tax rate. If the
government increases the tax rate, disposable income decreases and therefore, aggregate spending will also decrease.An
increase in investment is an injection into the circular flow of income and spending.
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