Economic Analysis I Revision Questions 4
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Economic Analysis I
Revision Questions 4
Macroeconomic Topics
1. Define stagflation. Why has it historically proved hard for central banks or the government to end stagflations?
2. Using an intuitive macroeconomic framework, explain why a contractionary fiscal policy may lead to a recession, increase public debt, and increase the risk of government default.
3. Explain why a fall in house prices could give rise to a systemic failure of the banking system. Your answer should refer to key concepts such as leverage, fire-sale, and systemic risk.
4. Explain key factors that contribute to the depth and length of recessions in mature, industrialised countries such as the UK or the US.
5. Explain how extreme pessimism during deep recessions can limit the effectiveness of monetary policy and deepen the recession.
6. Explain non-conventional monetary policies that central banks could use to counter deep recessions due to financial crises.
7. Suppose the conditions in the Chines real estate market deteriorate, a notable fraction of mortgage holders become unable to pay their mortgages, and the growth in the real estate market stagnates. How might such events affect the availability of credit in markets such as the UK, UK house prices, UK corporate investment, and global commodity prices including oil prices?
8. Highlight key differences between the 2007-9 credit crunch and the Covid-19 pandemic recession. Why may the Covid-19 pandemic recession be shorter and less devastating?
2023-01-19