ECO-7011A - Economics Concepts 2021-22
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School of Economics
Mid-Semester Online Timed Assessment (Macroeconomics) 2021-22
ECO-7011A - Economics Concepts
Timings
This assessment paper will be available for 24 hours, from 4 PM UK time. It is recommended you spend a maximum of two hours completing this assessment.
Instructions
Please answer ALL questions in this exam
Academic integrity
To maintain academic integrity students are required:
· Not to keep an electronic copy of this paper or share the content with
others
• Ensure that all work produced is solely their own. Students are advised
that their work will be checked using text matching software to determine
any similarity with the work of other students or with other published
materials. The University policy regarding plagiarism and collusion will
apply to this assessment.
Submission
The submission point for this timed online assessment will close at 4 PM UK time,
24 hours after being made available. It is recommended that you submit your
script as soon as completed. All answers must be submitted as a WORD or
PDF document, unless otherwise instructed. Guidance on submitting untyped
answers, such as diagrams and graphs, can be found on Blackboard.
1. Discuss the impact of contractionary monetary policy in the IS-LM model. Describe the process of adjustment to the new equilibrium. Why are bond prices and interest rates inversely related?
(30 marks)
2. Discuss the impact of a fiscal expansion in the IS-LM model. Explain what we mean by “crowding out”? What determines the magnitude of the crowding out effect?
(30 marks)
3. What is the fundamental economic insight of the Solow model? Discuss the impact of the following two changes in terms of the Solow model
a) A decrease in the savings rate of the economy.
b) A decrease in the population growth rate.
Carefully describe the process of adjustment to the new equilibrium.
(30 marks)
4. Do you agree with the following statement? “The Solow model predicts that poor countries should grow faster than rich countries”. Justify your answer.
(10 marks)
2022-01-25