ECC1100 S1 2020 Test Questions 1 ECC 1100 Semester 1, 2020 Tests Criteria for marking In this unit, you will be assessed on the basis of:

ECC1100 S1 2020 Test Questions

1

ECC 1100 Semester 1, 2020 Tests Criteria for marking In this unit, you will be assessed on the basis of:

• the depth of your understanding of the topic and the issues involved;

• your ability to apply the theoretical concepts to explain the relationship between economic variables;

• your ability to describe and explain the effects of changes in the macroeconomic variables under consideration;

• your ability to present the material in a clear, logical and well-structured format;

• an inclusion of accurately drawn and labelled diagrams (where applicable) which are fully incorporated into the discussion;

• the quality of presentation – involving correct spelling, grammar, good writing style and neat professional presentation is expected.

We are here to help: see consultations hours on Moodle. Note: You have to attempt the question assigned by your tutor. If you answer any other question your grade for the test will be 0.

********************************************************************************************************* TEST 1 Questions NOTE: You will be asked to answer ONE of the following THREE questions during tutorial of Week 3. This test is worth 8.33% of the total assessment for this unit. You have 15 minutes to complete the question.

1. Country A is a developing country. The nominal GDP in country A (expressed in

terms of country A currency) was 100 in 2018 and 200 in 2019.

Does this mean that the production in Country A doubles in 2019? Explain why/why

not (give TWO reasons).

2. Explain whether deflation leads to unexpected redistribution of wealth between

borrowers and lenders.

3. A new infrastructure project commenced by the state government generates 100

jobs. This would reduce unemployment by 100 (same extent as jobs created).

Explain whether you agree or disagree with this statement (give TWO reasons).

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ECC1100 S1 2020 Test Questions

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TEST 2 Questions NOTE: You will be asked to answer ONE of the following THREE questions during tutorial of Week 6. This test is worth 8.33% of the total assessment for this unit. You have 15 minutes to complete the question.

1. Explain the effect of an increase in imports (= an increase in marginal propensity to

import) on the equilibrium GDP in the Keynesian income-expenditure model.

In your answer, carefully show the new equilibrium and explain the adjustment to the

new equilibrium.

2. Carefully explain the effect of a $100 decrease in government transfers (subsidies for

education, pensions etc.) on the equilibrium GDP in the Keynesian income-

expenditure model.

In your answer, carefully show the new equilibrium and explain the adjustment to the

new equilibrium.

3. Suppose the Central bank of a country issues additional money as cash (additional

$100).

a. What will be the total change in money supply if all $100 are held as cash?

b. What will be the total change in money supply if all $100 are deposited in a

commercial bank?

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ECC1100 S1 2020 Test Questions

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TEST 3 Questions

NOTE: You will be asked to answer ONE of the following THREE questions during tutorial of Week 11. This test is worth 8.33% of the total assessment for this unit. You have 15 minutes to complete the question.

1. Suppose the current inflation rate is higher that the target inflation rate. Would the

Central bank increase or decrease the interest rate? In your answer, explain how the

Central bank makes this decision and explain the steps involved in changing the

interest rate.

2. Explain the effect of an increase in exports on the equilibrium output and inflation in

the AD-AS model. Carefully distinguish between the short-run and the long-run

equilibrium. Would this affect the potential output? Why/Why not?

3. Explain the meaning of technology and discuss the effect of technological progress

on economic growth.

In your answer, carefully explain the effect on real GDP, real GDP per capita and

average labour productivity.

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1. Explain the effect of an increase in imports (= an increase in marginal propensity to import) on the equilibrium GDP in the Keynesian income-expenditure model.
1. Explain the effect of an increase in imports (= an increase in marginal propensity to import) on the equilibrium GDP in the Keynesian income-expenditure model.
In your answer, carefully show the new equilibrium and explain the adjustment to the new equilibrium.
In your answer, carefully show the new equilibrium and explain the adjustment to the new equilibrium.
2. Carefully explain the effect of a $100 decrease in government transfers (subsidies for education, pensions etc.) on the equilibrium GDP in the Keynesian income-expenditure model.
2. Carefully explain the effect of a $100 decrease in government transfers (subsidies for education, pensions etc.) on the equilibrium GDP in the Keynesian income-expenditure model.
In your answer, carefully show the new equilibrium and explain the adjustment to the new equilibrium.
In your answer, carefully show the new equilibrium and explain the adjustment to the new equilibrium.
3. Suppose the Central bank of a country issues additional money as cash (additional $100).
3. Suppose the Central bank of a country issues additional money as cash (additional $100).
a. What will be the total change in money supply if all $100 are held as cash?
a. What will be the total change in money supply if all $100 are held as cash?
b. What will be the total change in money supply if all $100 are deposited in a commercial bank?
b. What will be the total change in money supply if all $100 are deposited in a commercial bank?

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