ECS2602
ECS2602
ECS2602 ASSIGNMENT 1
SEMESTER 2 - 2019
ECS2602
8/20/2019
1. Which of the following statements are correct?
2. Which of the following statements are correct?
to bring about an increase in the interest rate in order to decrease the demand for goods in the econo...
,1. Which of the following statements are correct?
a. Macroeconomics studies the determination of the level of output and income
for a specific firm.
b. In macroeconomics we focus on the interaction between different markets,
such as the goods market, the financial market, the labour market and the
foreign exchange market.
c. Real GDP per capita is widely used as a measure of economic welfare or
wellbeing of the residents of a country.
d. The main instrument of fiscal policy is the budget, while the main policy
variable is the interest rate.
e. A contractionary monetary policy implies a decrease in government spending
and an increase in taxation.
1. a, b and c
2. b, c and d
3. b, d and e
4. Only b and c
5. b, c and e
Macroeconomics deals with the economy as a whole and not the behaviour and
decisions of individual consumers, households and firms, as in microeconomics.
The main instrument of fiscal policy is the budget, while the main policy
variables are government spending and taxation.
A contractionary monetary policy entails a decrease in the money supply to bring
about an increase in the interest rate in order to decrease the demand for goods
in the economy.
2
, 2. Which of the following statements are correct?
a. Inflation targeting is an example of stabilisation policy.
b. The main policy variable of monetary policy is the interest rate.
c. A contractionary monetary policy implies a decrease in the interest rate to
bring about an increase in the money supply.
d. An increase is taxes implies the implementation of an expansionary fiscal
policy.
e An increase in the money supply implies the implementation of an
expansionary monetary policy.
f. The main policy variable of monetary policy is the money supply.
1. a and b
2. b, c and d
3. d, e and f
4. Only e and f
5. a and e
An expansionary monetary policy entails an increase in the money supply to
bring about a decrease in the interest rate in order to increase the demand for
goods in the economy. A contractionary monetary policy entails a decrease in
the money supply to bring about an increase in the interest rate in order to
decrease the demand for goods in the economy.
An increase is taxes implies the implementation of a contractionary fiscal policy.
3
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