ECS1601 ASSIGNMENT 3 SOLUTIONS SEMESTER 2 2020

ECS1601
ECS1601 ASSIGNMENT 3 SOLUTIONS SEMESTER 2
2020




ECS1601
ASSIGNMENT 3
SOLUTIONS
SEMESTER 2 2020

, ECS1601 ASSIGNMENT 3 SEMESTER 2 2020

UNIQUE NUMBER : 835743




3.1 Which of the following statements is correct?


[1] At any point below the 45-degree line, aggregate spending is greater than production and
income.
[2] At any point below the 45-degree line, aggregate spending is less than production but
greater than income.
[3] At any point below the 45-degree line, aggregate spending is greater than income but
smaller than production.
[4] At any point below the 45-degree line, aggregate spending is less than production
and income.


Explanation and illustration




3.2 Which of the following statements is incorrect?


[1] Induced consumption does not require income.
[2] People always consume even if income is zero.
[3] Consumption increases by less than the increase in income.
[4] There is no relationship between consumption and interest rates.
2