ECS2602 ASSIGNMENT 1 SEMESTER 2 - 2019

ECS2602 ASSIGNMENT 1 SEMESTER 2 - 2019. 100% CORRECT questions, answers, workings and explanations. 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.