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Money Supply - Economic Principles and Skills - Past Exam, Exams of Economics

Guru Angad Dev Veterinary and Animal Sciences UniversityEconomics

Money Supply, Aggregate Demand, Aggregate Supply, Keynesian Income, Expenditure Model, Autonomous Expenditure, Crowding Out, Fiscal Policy, Classical Model, Central Banks. Exam paper for economics students.

Typology: Exams

2011/2012

Uploaded on 12/06/2012

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ARHOLIADAU EXAMINATIONS
Mai / Mehefin 2010 May / June 2010
EC10320 ECONOMIC PRINCIPLES AND SKILLS 2
Time allowed 2 hours.
Answer QUESTION 1 from SECTION A and any TWO QUESTIONS from SECTION B.
Casio FX83ES and FX85ES calculators only may be used.
SECTION A
Question 1 – COMPULSORY
a) Explain the relationship shown by the aggregate demand (AD) curve and provide an
account of its slope. (7 marks)
b) Explain the relationship shown by the long-run and short- run aggregate supply (AS)
curves and provide an account of their slopes. (7 marks)
c) Use the AD-AS framework to illustrate how stagflation may be generated in the
economy. Will this persist over time? (20 marks)
(Total 34 marks)
SECTION B
Question 2
a) Use the Keynesian income expenditure model to illustrate and explain the concept of
the autonomous expenditure multiplier. (20 marks)
b) Graphically illustrate and explain the factors that determine the size of the multiplier.
(13 marks)
(Total 33 marks)
Turn Over
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Download Money Supply - Economic Principles and Skills - Past Exam and more Exams Economics in PDF only on Docsity!

ARHOLIADAU EXAMINATIONS

Mai / Mehefin 2010 May / June 2010

EC10320 ECONOMIC PRINCIPLES AND SKILLS 2

Time allowed 2 hours.

Answer QUESTION 1 from SECTION A and any TWO QUESTIONS from SECTION B.

Casio FX83ES and FX85ES calculators only may be used.

SECTION A

Question 1 – COMPULSORY

a) Explain the relationship shown by the aggregate demand (AD) curve and provide an account of its slope. (7 marks)

b) Explain the relationship shown by the long-run and short- run aggregate supply (AS) curves and provide an account of their slopes. (7 marks)

c) Use the AD-AS framework to illustrate how stagflation may be generated in the economy. Will this persist over time? (20 marks) (Total 34 marks)

SECTION B

Question 2

a) Use the Keynesian income expenditure model to illustrate and explain the concept of the autonomous expenditure multiplier. (20 marks)

b) Graphically illustrate and explain the factors that determine the size of the multiplier. (13 marks) (Total 33 marks)

Turn Over

Question 3

a) Derive the LM schedule and provide an account of its slope. (13 marks)

b) Illustrate and explain what is meant by ‘crowding out’ in the IS-LM model, using the case of expansionary fiscal policy. (20 marks) (Total 33 marks)

Question 4

a) Explain how employment and output are determined in the Classical Model.(13 marks)

b) Use this model to trace and explain the impact of an increase in labour productivity on the economy. (20 marks) (Total 33 marks)

Question 5

a) Explain the concept of the money multiplier in an economy with a monetary base of £ billion, where, commercial banks aim for a reserve ratio of 20%. (17 marks)

b) Identify and explain the ways in which central banks try to control the money supply. (16 marks) (Total 33 marks)

Question 6

Explain the relationship between unemployment and inflation in both the long-run and short-run. (33 marks)

Question 7

a) Use the Keynesian income expenditure model to illustrate the government expenditure multiplier, the autonomous tax multiplier and the balanced budget multiplier. (23 marks) b) Using the same model explain what happens to the aggregate expenditure schedule if income tax is increased. (10 marks) (Total 33 marks)

END OF PAPER