ECS1601 May/Jun 2014 exam paper — questions

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  1. Question 1 · Circular flow and the economic system · 2 marks

    Within the circular flow of income and spending that takes place between firms and households, there are three leakages (withdrawals) from the flow. Imports represent one of these leakages. Identify the other two leakages.Show the full question

  2. Question 2 · Monetary policy and the Reserve Bank · 2 marks

    Give the names of two monetary policy instruments that are considered market-orientated in nature.Show the full question

  3. Question 3 · Fiscal policy, taxation and public finance · 4 marks

    List three criteria that are used to judge whether a tax is a good tax, and then give a brief explanation of one of these criteria.Show the full question

  4. Question 4 · Exchange rates, balance of payments and trade · 1 marks

    Consider two countries, Alfa and Beta, each of which can only produce cars and bicycles. Alfa's production possibilities are 200 cars or 1200 bicycles, while Beta's production possibilities are 200 cars or 1400 bicycles. The president of Alfa wishes to trade cars with Beta and asks you to determine whether Alfa has an absolute or a comparative advantage in the production of cars.Show the full question

  5. Question 5 · Fiscal policy, taxation and public finance · 2 marks

    Identify two kinds of lags that delay the effect of monetary and fiscal policy on the economy.Show the full question

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