ECS1601 ASSIGNMENT 5SEMESTER 2 2022

ECS1601
ASSIGNMENT 5
SEMESTER 2
2022

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Question 1
Correct
Which of the following statements is correct?
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a. Restrictive fiscal and monetary policies are applied V Flag question

during periods of economic growth (boom).
b. Fiscal policy entails changes in the interest rate.
c. The impact lag is longer for fiscal policy than for
monetary policy.
d. The decision lag is shorter for fiscal policy than for
monetary policy.



Refer to section 9.3 of the prescribed textbook.




Question 2
Correct
Suppose that the central bank reduces the repo rate. What
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will happen in the AD-AS model?
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V Flag question
(a) Investment decreases

(b) Aggregate demand increases

(c) Consumption increases

(d) Income decreases

(e) Prices increase



a. Only b, c and e are correct.

b. Only a, d and e are correct.

c. All a, b, c, d and e are correct.

d. Only a, b, c and d are correct.

e. Only a and d are correct.




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