DD209 Running The Economy : About time the website tutorial errors were sorted.

We last came across these problems months ago, so why has the online tutorial not been corrected to provide accurate answers.

It doesn't exactly help when doing revision.......

Box 2: Asset prices

Which of the following are likely to result from a fall in the base rate? (Choose more than one answer.)

 

an increase in wealthCorrect. This happens because of the inverse relationship between asset prices and interest rates, so that the price of all assets increases, and so does the wealth of asset owners. This can encourage more spending, and consequently a higher equilibrium output.

 

a fall in investment

 

a fall in savingCorrect. Since the rise in asset prices makes people feel wealthier, they feel less need to save.

 

a movement down the IS curveCorrect. The ‘asset price’ or ‘wealth’ effect encourages more spending so this is a second channel whereby more spending is linked to a fall in interest rates. This is what is shown by the IS curve.

  

You have 2 correct answers and 1 wrong answer. Try again.

its not really good enough is it ?