ECS3701 ASSIGNMENT O1- 2021 ANSWERS

Assignment 1 2021 100% Guaranteed
ECS3701
Monetary Economics III
ECS3701
Assignment 01 (Compulsory)

ECS3701
Unique number 602307
Due date 30 April 2021
Material Learning units 1–6



1.1 Lower interest rates could ……… savings but at the same time could …… the buying of a car


[1] discourage; encourage
[2] discourage; discourage
[3] encourage; discourage
[4] encourage; encourage


1.2 Recession is a period during which


[1] The interest rates are increasing.
[2] The real GDP is declining
[3] The unemployment rate is low
[4] The inflation rate is high
1.3 Which one of the following statements regarding financial institutions is correct?


[1] Financial intermediaries act as middlemen between the lender and the borrower
[2] Banks provides a channel for those who want to buy shares
[3] The South African Reserve Bank is an example of a financial intermediary
[4] Banks do not play a role in determining the quantity of money


1.4 An attribute of a bond that influences its interest rate is ……


[1] risk structure
[2] real interest rate
[3] default
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, [4] premium


1.5 A bond with default risk will always have a


[1] negative risk premium
[2] positive risk premium
[3] change in risk premium
[4] lower risk premium


1.6. Shares are sold for the first time in the …… and resold in the …… market


[1] Capital; money
[2] Primary; secondary
[3] Exchanges; over-the-counter
[4] Money; capital


1.7 On which market do companies rely on to raise funds?


[1] Over-the-counter market
[2] Capital market
[3] Primary market
[4] Money market




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