2026 - ECS3701 - ASSESSMENT 1 - QUESTIONS AND ANSWERS - SEMESTER 2

1
2026 – S2 – ECS3701 – ASSESSMENT 1 – Q&A

QUIZ

Assessment 1
Started on Sunday, 23 August 2026,
State Finished
Completed on Sunday, 23 August 2026,
Time taken
Marks 19.00/20.00
Grade 95.00 out of 100.00


Question 1
Which one of the following statements is correct?


a.
The segmented markets theory cannot explain the fact that interest rates on bonds of different
maturities tend to move together.

b.
The term structure of interest rates is the relationship among the term of maturity of different
bonds.

c.
If income tax rates are increased, the prices of Treasury bonds will increase.

d.
A bond with a lower default risk will always have a positive risk premium.


Question 2
GDP measured with constant prices is referred to as ...

a.
CPI

b.
the GDP deflator

c.
real GDP

, 2
2026 – S2 – ECS3701 – ASSESSMENT 1 – Q&A

d.
nominal GDP


Question 3
If an investor purchased a bond that has 30 years to maturity and the interest rate rises from
10% to 20%, the investor would have experienced ...


a.
good investment.

b.
no change in return.

c.
capital loss.

d.
capital gain.


Question 4
If you move money from demand deposits to cheque deposits,


a.
M1 decreases and M2 increases.

b.
M1 increases and M2 stays the same.

c.
M1 increases and M3 also increases.

d.
M1 stays the same and M2 stays the same.


Question 5
Recession is a period during which