MEC 002 ACROECONOMIC ANALYSIS December 2019 Question Paper

 

MEC 002 ACROECONOMIC ANALYSIS

December 2019 Question Paper

Time : 3 hours Maximum Marks : 100

Note : Answer the questions from each section as directed.

SECTION A

Answer any two questions from this section.

1. Explain how steady state is achieved in the Solow model. What additional conditions need to be fulfilled for attaining the Golden Rule ?

2. The Phillips curve describes a trade-off between inflation and unemployment. Can it be used to explain stagflation and natural rate of unemployment ?

3. Explain how simultaneous equilibrium is achieved in goods and money markets with the help of IS-LM curves.

4. Briefly discuss the life cycle hypothesis and permanent income hypothesis of consumption.

SECTION B

Answer any five questions from this section.

5. Explain the concept of rational expectations. What are its implications on policy-making ?

6. Explain the "efficiency wage" model. What are its implications ?

7. Critically evaluate the endogenous growth theory.

8. Explain the mechanism through which internal and external balance takes place under flexible exchange rate.

9. What are the phases of business cycle ? How does political business cycle theory explain these phases ?

10. Bring out the important tenets of Real Business Cycle theory.

11. Explain why monetary policy is ineffective when the economy is in a liquidity trap.

12. Write short notes on any two of the following :

(a) Lucas Critique

(b) Phase Diagram

(c) Effective Exchange Rate

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