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How companies expanding the use of techniques described in the opening case to understand the impact consumer behavior?
Give a clear and convincing argument that a solution to the consumer's problem still exists, but that it need not be unique.
How does a currency depreciation affect the balance of payments? When might a currency depreciation intended to correct a current account deficit fail?
How a central bank might intervene in the foreign exchange market to prevent the decline in the exchange rate?
How did fixed exchange rates contribute to these crises? Why are fixed rates unsustainable in a world of global capital markets?
Why is purchasing power parity theory likely to be a defective explanation for the level of an exchange rate in the short run?
What do you understand by the term customs union? Give an example of a free trade area that is a customs unions.
In what ways can financing from international bodies such as World Bank and the Asian Development Bank contribute to reducing poverty in low-income economies?
What difficulties might be created within the EU from the accession of the lower-income economies of central, eastern and southern Europe?
What do you understand by the term business cycle? Compare and contrast long-wave theory with the theories of shorter-term business cycles.
Why may the supply-induced business cycle theory be an inadequate explanation of most business cycles? What do you understand by the term rational expectations?
What do you understand by the term real business cycle theory? How does it contrast with demand-induced theories of the business cycle?
Under what circumstances would you expect Say's law of markets not to operate to maintain full employment?
Discuss the importance of forecasting in the context of successful macroeconomic policy formulation and implementation.
What do you understand by the term public choice theory? How does public choice theory undermine Keynesian economics?
Explain, using appropriate diagrams, how fiscal policy might be used to combat (a) an inflationary gap, and (b) a deflationary gap, in the economy.
Identify and illustrate the policy options to deal with these pressures from both the demand-side and supply-side of the economy.
Distinguish between policy targets, policy instruments and policy goals. Give examples of each.
Differentiate between demand-side and supply-side policies. Provide a short report for a country of your choice highlighting the current economic situation.
Why might increases in aggregate demand simply lead to a higher price level rather than a higher real GDP?
How might governments attempt to influence long-run aggregate supply and there-fore potential GDP?
Explain the composition of aggregate demand. Explain under what circumstances the aggregate demand curve might shift (a) to the right (b) to the left.
Explain how the multiplier and accelerator effects may impact together to lead to fluctuation. What steps might government adopt to reduce economic instability?
Calculate the change in national income that can be expected from the £2bn of extra government spending.
Calculate the total level of savings from the new level of income and the change in consumption that will result from the higher income now received.