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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)