ECS_2602_assessment_2_answers

Assessment 2: Attempt review https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=167




UNISA  2024  ECS2602-24-S1  Welcome to the module ECS2602-24-S1  Assessment 2

QUIZ




Started on Tuesday, 2 April 2024, 3:26 PM
State Finished
Completed on Tuesday, 16 April 2024, 4:02 PM
Time taken 14 days
Marks 26.00/30.00
Grade 86.67 out of 100.00


Question 1

Correct

Mark 1.00 out of 1.00




Which one of the following statements is INCORRECT?

Select one:
A. An increase in investors' con�dence increases autonomous
investment. Since a positive relationship exists between
investment and the level of output and income, the IS curve will
shift to the right.

B. An increase in investors' con�dence increases autonomous
spending, and the IS curve shifts to the right.

C. An increase in  This statement is the only INCORRECT
investors' statement. Investors' con�dence is one of
con�dence the autonomous spending components, and
increases therefore an increase in investor con�dence
autonomous will shift the IS curve to the right (and not a
investment, movement along the IS curve).
and therefore, an
upward movement
along the IS curve
occurs.

D. An increase in investors' con�dence increases the level of output
and income, and the IS curve shifts to the right.



Your answer is correct.
The correct answer is:
An increase in investors' con�dence increases autonomous investment,
and therefore, an upward movement along the IS curve occurs.




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Question 2

Correct

Mark 1.00 out of 1.00




This question is based on the following comparison between the impact of
an expansionary �scal policy with a contractionary monetary policy in the
IS-LM model:



Expansionary Contractionary
�scal policy monetary policy

The demand for goods Higher Lower

The level of output and income Higher Lower

The interest rate Unchanged Higher

Investment spending Higher Lower

Money demand and the quantity of money Higher Lower

Budget de�cit Higher Unchanged



The reason for the higher quantity of money demand and the quantity of
money for an expansionary �scal policy is that the _______ while for a
contractionary monetary policy it is lower since the ________.

Select one:
A. level of output and income is lower; level of output and income is higher

B. interest rate is unchanged; interest rate is higher

C. level of output and income is higher; level of output and income is 
lower

D. investment spending is higher; investment spending is lower




Your answer is correct. A positive relationship exists between the level of output
and income and the quantity demand for money and the quantity for money. In
the case of an expansionary �scal policy, the level of output and income is higher
(Y↑ → Md↑ → M↑). In the case of contractionary monetary policy, the level of
output and income is lower (Y↓ → Md↓ → M↓).
The correct answer is:
level of output and income is higher; level of output and income is lower




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Question 3

Correct

Mark 1.00 out of 1.00




This question is based on the following table, which indicates potential
investment projects, expected rate of return for each project and the funding
required for each project.



Project Expected rate of return Funding required

A 15% R2 million

B 8% R3 million

C 12% R4 million

D 5% R1 million



Which one of the following statements is INCORRECT?

Select one:
A. At a market  This statement is the only INCORRECT
interest rate of statement. An increase in the market interest
13%, projects A rate increases the cost of borrowing money, and
and C are �rms will �nd fewer pro�table investment
feasible, and opportunities. Only project A will be feasible at a
the level of market interest rate of 13%, and the planned
planned investment spending level is R2 million.
investment
spending is R6
million.

B. At a market interest rate of 4%, all the projects are feasible, and the level
of planned investment spending is R10 million.

C. At a market interest rate of 16%, none of the projects is pro�table
because the cost of the investment is higher than the rate of return.

D. At a market interest rate of 7%, projects A, B and C are feasible, and the
level of planned investment spending is R9 million.




Your answer is correct.
The correct answer is:
At a market interest rate of 13%, projects A and C are feasible, and the level of
planned investment spending is R6 million.




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