Following questions relate to the below information:

The interest rate on South Africa's 3-Month Treasury bills fell from 6% on 3 February 2020 to 2.66% on 1 May 2020.

1. In terms of the financial market model used in this module, which of the following statements are correct?

a.Compared to February, there has been a decrease in the price paid for 3-Month treasury bills.

b.Compared to February, there has been an increase in the price paid for 3-Month treasury bills.

c.The central bank has employed an expansionary monetary policy.

d.The central bank has employed a contractionary monetary policy.

1.Only options a and c

2.Only options a and d

3.Only options b and c

4.Only options b and d

5.None of the options is correct

2. On the 1st May 2020 was South Africa in a liquidity trap?

1.Yes, because a decrease in the interest rate can be brought about by the central bank buying of bonds.

2.No, because financial money market participants are willing to hold more money at the same interest rate.

3.Yes, because there is a high demand for bonds.

4.No, because the interest rate is not at the zero lower bound.

5.None of the options is correct.

3. The impact of this monetary policy on the trade balance can be described by which of the following chain of events?

a.E X NX

b.E X NX

c.E IM NX

d.E IM NX

e.Pimports Imports bill NX

f.Pimports Imports bill NX

4. Which variables will be higher in the medium-run of the AS-AD model as a result of this monetary policy.

a.Interest rate

b.Investment spending

c.Expected price level

d.Actual price level

e.Level of output and income

1.Options a, b, c, d and e

2.Only options a, b and d

3.Only options a and c

4.Only options c and d

5.None of the options is correct