ECS1601 Assignment 3 of 2021

ECS1601 ASSIGNMENT 3
UNIQUE NUMBER: 789067
SEMESTER 1 &2 2021




3.1 In the simple Keynesian model, which one of the following statements is
incorrect?


[1] Spending may be equal to production and income.
[2] Spending may be greater than production and income.
[3] Spending may be greater than production, but smaller than income.
[4] Spending may be less than production and income.

Total production, income and spending are identically equal in the national
accounts. The national accounting system is essentially a bookkeeping
system which is used to measure economic activity after it has occurred.
Economists often use the Latin term ex post to denote that measurement
occurs after the event (or after the fact). The ex post equality of total
production, income and spending in the national accounts is guaranteed by
the way in which these concepts are defined




3.2 The consumption function is based on the premise that as income increases,
consumption expenditure …

[1] increases by a larger amount.
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, [2] increases by the same amount.
[3] remains constant unless saving also changes.
[4] increases by a smaller amount.




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