Assessment 3: Attempt review https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=184
UNISA 2024 ECS2602-24-S1 Welcome to the module ECS2602-24-S1 Assessment 3
QUIZ
Started on Monday, 29 April 2024, 9:07 AM
State Finished
Completed on Monday, 29 April 2024, 1:41 PM
Time taken 4 hours 34 mins
Marks 22.00/30.00
Grade 73.33 out of 100.00
1 of 29 2024/04/30, 15
,Assessment 3: Attempt review https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=184
Question 1
Correct
Mark 1.00 out of 1.00
Using the IS-LM model for an open economy, a country that takes the following
policy actions will de�nitely cause net exports to worsen.
Select one:
A. Contractionary �scal policy combined with an expansionary monetary
policy.
B. Contractionary �scal policy combined with a contractionary monetary
policy.
C. Expansionary �scal policy combined with a contractionary monetary
policy.
D. Expansionary �scal policy combined with an expansionary monetary
policy.
Your answer is correct. Expansionary �scal policy will shift the IS curve to the
right, and the level of output and income will increase. The implementation of
contractionary monetary policy implies an increase in the interest rate. Since a
positive relationship exists between the interest rate and the exchange rate, the
exchange rate appreciates (i↑ → E↑). The net exports position worsens. Why? The
increase in the level of output and income increases imports: Y↑ → IM↑ → NX↓.
An appreciation of the domestic currency increases the price of exports, and the
net export position worsens. Simultaneously, an appreciation decreases the price
of imports, and the net exports position worsens. The exchange rate appreciates,
and therefore, exports decrease, and imports increase.
E↑ → X↓ → NX↓
E↑ → IM↑ → NX↓
The diagram will look as follows:
The correct answer is:
Expansionary �scal policy combined with a contractionary monetary policy.
2 of 29 2024/04/30, 15
,Assessment 3: Attempt review https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=184
Question 2
Incorrect
Mark 0.00 out of 1.00
This question is based on the following diagram of an IS-LM model for an open
economy.
Which one of the following statements is correct?
Select one:
A. The diagram above illustrates the impact of a contractionary �scal policy
on the exchange rate.
B. The diagram above illustrates the impact of a contractionary
monetary policy on the exchange rate.
C. The diagram above illustrates the impact of an expansionary monetary
policy on the exchange rate.
D. The diagram above illustrates the impact of an expansionary �scal policy
on the exchange rate.
Your answer is incorrect. A decrease in the interest rate refers to an expansionary
monetary policy. A positive relationship exists between the interest rate and the
exchange rate. Therefore: i↓ → E↓ (a depreciation of the exchange rate).
The correct answer is:
The diagram above illustrates the impact of an expansionary monetary policy on
the exchange rate.
3 of 29 2024/04/30, 15
UNISA 2024 ECS2602-24-S1 Welcome to the module ECS2602-24-S1 Assessment 3
QUIZ
Started on Monday, 29 April 2024, 9:07 AM
State Finished
Completed on Monday, 29 April 2024, 1:41 PM
Time taken 4 hours 34 mins
Marks 22.00/30.00
Grade 73.33 out of 100.00
1 of 29 2024/04/30, 15
,Assessment 3: Attempt review https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=184
Question 1
Correct
Mark 1.00 out of 1.00
Using the IS-LM model for an open economy, a country that takes the following
policy actions will de�nitely cause net exports to worsen.
Select one:
A. Contractionary �scal policy combined with an expansionary monetary
policy.
B. Contractionary �scal policy combined with a contractionary monetary
policy.
C. Expansionary �scal policy combined with a contractionary monetary
policy.
D. Expansionary �scal policy combined with an expansionary monetary
policy.
Your answer is correct. Expansionary �scal policy will shift the IS curve to the
right, and the level of output and income will increase. The implementation of
contractionary monetary policy implies an increase in the interest rate. Since a
positive relationship exists between the interest rate and the exchange rate, the
exchange rate appreciates (i↑ → E↑). The net exports position worsens. Why? The
increase in the level of output and income increases imports: Y↑ → IM↑ → NX↓.
An appreciation of the domestic currency increases the price of exports, and the
net export position worsens. Simultaneously, an appreciation decreases the price
of imports, and the net exports position worsens. The exchange rate appreciates,
and therefore, exports decrease, and imports increase.
E↑ → X↓ → NX↓
E↑ → IM↑ → NX↓
The diagram will look as follows:
The correct answer is:
Expansionary �scal policy combined with a contractionary monetary policy.
2 of 29 2024/04/30, 15
,Assessment 3: Attempt review https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=184
Question 2
Incorrect
Mark 0.00 out of 1.00
This question is based on the following diagram of an IS-LM model for an open
economy.
Which one of the following statements is correct?
Select one:
A. The diagram above illustrates the impact of a contractionary �scal policy
on the exchange rate.
B. The diagram above illustrates the impact of a contractionary
monetary policy on the exchange rate.
C. The diagram above illustrates the impact of an expansionary monetary
policy on the exchange rate.
D. The diagram above illustrates the impact of an expansionary �scal policy
on the exchange rate.
Your answer is incorrect. A decrease in the interest rate refers to an expansionary
monetary policy. A positive relationship exists between the interest rate and the
exchange rate. Therefore: i↓ → E↓ (a depreciation of the exchange rate).
The correct answer is:
The diagram above illustrates the impact of an expansionary monetary policy on
the exchange rate.
3 of 29 2024/04/30, 15
