Section A:
Question 1: Under what conditions does an economy realize steady state? In the neo-classical growth model describe how Golden Rule is distinct from steady state.
Question 2: Describe the basis on which the Lucas criticizes econometric modeling. What is the role of micro- foundations in Lucas critique?
Section B:
Question 3: Classify different theories of unemployment based on the possible responses of the firm.
Question 4: What is an IS curve? Describe how equilibrium in the real market can be presented via IS curve.
Question 5: Critically compute the endogenous growth theory.
Question 6: Describe the mechanism via which internal and external balance occurs under flexible exchange rate.
Question 7: Write short notes on the given:
a) Menu cost.
b) Non-accelerating Inflation Rate of Unemployment (NAIRU).