You are about to sit an online assessment

You have a 24-hour period in which to complete this exam. This 24-hour period is the time during which you can arrange to take the exam. It is NOT the length of the exam.

How to complete this exam:

Students should answer ALL questions from Section A, TWO questions from Section B and ONE question (in all its parts) from Section C. Use a separate document for each question in sections B & C.

Instructions to students:

Read the exam student guidance onMoodle.

For this exam, the total required number of questions is ELEVEN.

1.   Advice on the contents of the exam and technical support

If you have questions about the contents of this paper, or you require technical      assistance, please contact our virtual invigilation team at the University of Glasgow Helpdeskhttps://www.gla.ac.uk/helpor on +44 (0)141 330 4800.

An academic member of staff will be available to answer questions about the                     examination as they would normally at the beginning of the exam.  Technical support      will be available 24 hours per day.  To ensure timely responses and that all students         receive the same information, you should not contact academic staff directly but instead use the Helpdesk.

2.   You are about to sit an online assessment

The standard duration of this exam is ONE HOUR 30 MINUTES.  Additional time of ONE HOUR 30 MINUTES will be given to begin and complete this exam.  The additional time  allows for downloading the paper, uploading your answers and for any adjustments you might normally receive if you are registered with the University’s Disability Service (see section3).

3.   Time adjustments for students with disabilities

If you have in the past been granted adjustments to your exam time, e.g. through the   University’s Disability Service or at School or College, allowance is made for these since

you have TWICE the normal time usually allowed in which to complete this exam (exam duration +100%).

4.   Enlarging the text

If you need to enlarge the text of a PDF document: open Adobe Acrobat; click on the VIEW tab; click on ZOOM and then ZOOM TO; select the desired magnification level.

5.   Planning your time

When planning your time, you should allocate time to download the exam paper and to  upload your answers to Moodle at the end of the exam.  For students instructed to do     so, you should allow time to submit your exam script on Turnitin within the exam period.

Please report any technical difficulties experienced as soon as possible via

https://www.gla.ac.uk/help.

6.   Submitting your answers

This exam has been configured to ‘auto-submit’ uploaded file(s) at the end of the scheduled exam time. If you have not submitted your completed answers by this time you should         submit viabusiness-school-assessment@glasgow.ac.ukSubmissions made direct to School in the two hours following the end of the scheduled exam time will be treated as ‘late’ and  will be graded ‘H’ .

7.   Declaration of Academic Integrity

The following information is very important – your degree may be at risk if you do not adhere to these instructions:

·      You must not communicate with any other person about these examination questions

during the period in which you can submit your answers

·      You must follow any instructions on your examination paper regarding use of resources such

as internet sources, books, notes or any other material that would not normally be allowed in examinations on campus .

·      The work you submit must be entirely your own effort and must demonstrate your

understanding rather than reproduce text from notes, slides, books, or online sources (which is plagiarism)

·      You must not submit answers you have discussed with or copied from others, and you must

not copy from notes you have prepared with or shared with others.  If your answers are similar to those of any other candidate(s) you will both/all be suspected of collusion and referred to Student Conduct

·      This declaration incorporates the University’s Declaration of Originality which applies to all

academic work (see below).

Declaring that the work is your own

Before viewing the exam paper, you must check the box in the Exam Section on the Moodle Course page to agree to both this declaration and the University’s Declaration of Originality .

Section B

You must answer TWO questions from this section (all questions of equal weighting). Use a separate document for each question.

Question 2.    [20%]

Explain what happens in a liquidity trap.

Question 3. [20%]

Consider the following rule for the conduct of monetary policy, sometimes known as ‘Taylor’s rule’: the central bank should set its nominal interest rate to depend positively on the inflation rate and negatively on excess unemployment, defined as the actual unemployment rate        minus the natural rate of unemployment .

i)          Describe briefly the reasons for such a rule. What information would a central bank need to apply the rule?

ii)        Why does the rule focus on excess unemployment but not simply on the unemployment rate?

Question 4. [20%]

Explain the economic justification for central bank independence, that is, the separation of   monetary policy from direct political control. Hence, assess whether this separation will lead to the elimination of an ‘inflation bias’ .

Question 5. [20%]

"Wage bargaining determines the nominal, but not the real wage."

"Wage bargaining determines unemployment, but not the real wage."

Discuss.

Section C [20%]

You must answer ALL parts of question 6. Submit your answer in a (single) separate document.

Question 6.

The table below contains information on gross weekly earnings of Mr Median-Employee for 2014 - 2018.

a). What type of dataset we have in this table: time series, cross sectional or panel data?

b).  Calculate  the  mean  of  Mr  Median-Employee’s  gross weekly  earnings.  Explain  your calculations.

c) Calculate the range of Mr Median-Employee’s gross weekly earnings.

d). Calculate the variance of Mr Median-Employee’s gross weekly earnings. Explain your calculations.

e). Calculate the standard deviation of Mr Median-Employee’s gross weekly earnings. Explain your calculations.

A researcher decided to use data from The National Longitudinal Survey of Women 1988 (USA) to study the relationship between hourly wage and loyalty to employer (number of years spent working for the same employer).

Estimating regression equation

wagei =  +  tenurei +  i

where:

wagei      is the hourly wage measured in US dollars,

tenurei   is the number of years spent working for the current employer and  i  is an error term,

produced the following results:

f). What is the value of the OLS estimate of the coefficient on tenure? Provide an interpretation of this coefficient paying particular attention to the units of variables.

g). What is the value of the OLS estimate for the intercept? Provide an interpretation of this coefficient paying particular attention to the units of variables.

h). Test the hypothesis:  α = 0 against α ≠ 0 using a 95% confidence interval.