Posted: October 12th, 2016

1. Definition of: Total Consumption Disposable income Autonomous consumption Income dependent Consumption 2. Fiscal and monetary tools are used to fix the macro economy. Briefly explain how might a tax cut affect both AD and AS? (10 marks) (Before answer the question give definition of Aggregate demand and aggregate supply) Then draw the graph for aggregate demand and supply, then shift the graph or move along the graph according the impact of tax cut and what is the new equilibrium point. The AD demand will shift rightward when tax decrease explains. 3. One of the goals of a Federated Government is to stimulate the economy. This may be achieved in three distinct steps. You are required to use 3 different graph to indicate these three steps. (15 marks).

1. Definition of:
Total Consumption
Disposable income
Autonomous consumption
Income dependent Consumption

2. Fiscal and monetary tools are used to fix the macro economy. Briefly explain how might a tax cut affect both AD and AS? (10 marks)
(Before answer the question give definition of Aggregate demand and aggregate supply)
Then draw the graph for aggregate demand and supply, then shift the graph or move along the graph according the impact of tax cut and what is the new equilibrium point.
The AD demand will shift rightward when tax decrease explains.
3. One of the goals of a Federated Government is to stimulate the economy. This may be achieved in three distinct steps. You are required to use 3 different graph to indicate these three steps. (15 marks).