Q.2. Fiscal drag occurs when:O when interest rates smooth volatility in economic cyclesO tax rates move inversely with inflationO tax bands do not increase with inflationO government spending falls to reduce aggregate demand

Questions 47 to 49 relate to the table below Suppose people only consume 3 different goods. The following table shows the prices and quantities of each good consumed in 2006, 2007, and 2008. Price of Year Quantity of Price of Quantity Price of Quantity of Plates (E) Plates Beef (E) of Beef Mobiles (E) Mobiles 2006 5 100 125 50 210 2007 6 150 8 150 75 210 2008 300 225 80 300 The nominal GDP for each of the three years,2006, 2007 and 2008 respectively are: O f27,675;f12,125;;E17,850 O f12,200;E17,896,f27865 O f12,125;f17,850;f27,675 O 17,850;f12,125;E27,675