ECS2602 ASSIGNMENT 3 – ONLINE ASSESSMENT (SEMESTER 2 – POSSIBLE QUESTIONS AND SOLUTIONS

ECS2602 ASSIGNMENT 3 – ONLINE ASSESSMENT (SEMESTER 2 – POSSIBLE QUESTIONS AND SOLUTIONS Question 1 of 15 This question is based on the following diagram of an IS-LM model for an open economy A decrease in government spending causes ... A. a decrease in the demand for goods and the level of output; a decrease in the demand for money and the interest rate; a depreciation of the domestic currency and the trade balance deteriorates as exports increases. B. a decrease in the demand for goods and the level of output; a decrease in the demand for money and the interest rate; a depreciation of the domestic currency and the trade balance improves as exports increases. C. a decrease in the demand for goods and the level of output; an increase in the demand for money and the interest rate; a depreciation of the domestic currency and the trade balance improves as exports increases. D. a decrease in the demand for goods and the level of output; a decrease in the demand for money and an increase in the interest rate; an appreciation of the domestic currency and the trade balance improves as exports increases