Mec-002 Eng

No.
of Printed Pages : 4 I MEC-0021
MASTER OF ARTS (ECONOMICS)

Irt) Term-End Examination
00
c\1 December, 2011
MEC-002 : MACRO ECONOMIC ANALYSIS
Time : 3 hours Maximum Marks : 100
Note : Answer any two questions from section-A and five
questions from section-B.
SECTION - A
Answer any two questions in about 500 words

each. 2x20=40
1. In the solav model what is meant by steady
state ? Explain the impact of population growth
and change in savings rate on steady rate.
2. What is meant by business cycle ? How do the

new classical economists explain business cycle ?
3. What is meant by rational expectations ? What

are its impact so far as inflation unemployment
trade off is concerned ?
4. Explain how internal and external balance are

achieved under flexible exchange rate ?
MEC-002 1 P.T.O.
SECTION - B
Answer any five questions in about 250 words

each. 5x12=60
5. Critically examine the endogenous growth theory.
6. How do you derive the LM curve ? What are the

implications of LM curve ? What are the factors
that influence the shape of LM curve ?
7. Why do firms not change their price frequently

even when other variables are changing ? Explain
in light of new Keynesian perspectives.
8. Why do firms offer a higher wage rate to workers

than the equilibrium wage rate ? What are its
impact as the macro economy ?
9. Critically examine the political business cycle

model as propounded by Kalecki.
10. Bring out the main tenets of permanent income

hypothesis.
11. Examine the points raised by Lucas while

criticising Keynesia economics.
12. Write short notes on the following :

(a) Insider-Outsider model of unemployment.
(b) Rules versus discretion.
MEC-002 2
No. of Printed Pages : 4 I MEC-002
MASTER OF ARTS
l'r")
(ECONOMICS)
Term-End Examination
(-4
O December, 2014
MEC-002 : MACROECONOMIC ANALYSIS

Note : Answer questions from each section as directed.
SECTION - A
Answer any two questions from this section in
about 500 words each. 2x20=40
1. The trade-off between inflation and
unemployment occurs in the short-run only. Do
you agree with the above statement ? Support
your answer with appropriate explanation and
diagram.
2. Fiscal policy in an open economy with flexible

exchange rate will not be effective. Substantiate
the above statement with appropriate diagrams.
3. Explain equilibrium output and interest rate on

the basis of IS-LM model. How do you derive IS
and LM curves ?
4. What do you mean by real rigidities ? Why do

real rigidities occur in wage rate and in price
level ?
MEC-002 1 P.T.O.
SECTION - B
Answer any five questions from this section in
5. Discretionary fiscal policy may not be good for

the economy. Do you agree ? Give arguments in
support of your answer.
6. Discuss the salient features of real business cycle

theory.
7. Explain how Phelp's golden rule is an

improvement over Solow model. What are its
limitations ?
8. What are the issues on which Lucas criticises

Keynesian model ?
9. Explain why aggregate supply curve is positively

sloped in the short run but vertical in the long
run ?
10. Bring out the major insights of permanent income

hypothesis.
11. What is endogenous growth model ? What are

its implications ?

(a) Rational expectations hypothesis
(b) Efficiency wage theory
MEC-002 2
04590
No. of Printed Pages : 4 MEC-002

December, 2015
Note : Attempt questions from each section as directed.
SECTION A
Answer any two questions from this section in about
500 words each. 2x20=40
1. Explain the role of Human Capital and R & D in

endogenous growth theory. Also give a critical
assessment of New Growth Theory.
2. HOw can life cycle hypothesis solve Kuznets'

consumption data puzzle ? Explain.
3. How does a country use fiscal and monetary

policies to correct a recession or unemployment
with flexible exchange rates; given perfect capital
mobility ? Explain.
4. What is Steady State ? Explain the Golden Rule

for steady state for an economy.
MEC-002 1 P.T.O.
SECTION B
Answer any five questions from this section in about
250 words each. 5x 12=60
5. Explain the main features of classical dichotomy.
6. "IS — LM analysis is neo-classical synthesis."

Explain.
7. What are the implications of random walk

hypothesis of consumption for the government
policies ?
Explain the idea of intertemporal maximization of

utility.
9. Distinguish between adaptive and rational

expectation approaches.
10. Compare and contrast J. Schumpeter's and

R. Goldwin's approaches to generation of
business cycles.
11. Explain the two-period overlapping generations

model.
12. What are the main features of search models of

employment ? Explain.
13. Briefly explain the following :

(a) Wage-price rigidity
(b) Real Business Cycle
MEC-002 2
05442
June, 2014
SECTION I

1. What is meant by steady state ? Derive the

condition for steady state in the Solow model.
Does it imply maximum consumption in the
economy ?
•
2. Derive IS — LM curves for an economy. What do
these curves depict ?
3. What is meant by Phillips curve ? What are its

implications ? What is its shape in the long run ?
4. Monetary policy is not effective in an economy

with fixed exchange rate. Substantiate the above
statement with the help of appropriate
diagrams.
MEC-002 1 P.T.O.
SECTION II
5. Bring out the relationship between Average

Propensity to Consume (APC) and Marginal
Propensity to Consume (MPC). Explain the role
of MPC on investment multiplier. What are the
factors that may affect the value of the
multiplier ?
6. What is efficiency wage theory ? What are the

justifications for efficiency wage ?
7. What is meant by Lucas critique ?
8. Bring out the major tenets of search models of

employment.
9. Why do rigidities occur in real wage and in

price ?
10. Explain the phases of a business cycle. How does

political business cycle theory explain the
phases ?
11. Bring out the rationale for endogenous growth

models.

(a) Real business cycle
(b) Rational expectations
MEC-002 2
No. of Printed Pages : 5 I MEC-002 I

June, 2016 03439

SECTION - A
Answer any two questions from this section.
2x20=40
1. Contrast the effectiveness of fiscal and monetary
policy in influencing the level of aggregate output
in an open economy with flexible exchange rates.
2. Discuss the nature of expectations in Keynes'

Macroeconomic theory and the role played by
them in his analysis of economic fluctuations.
3. What is meant by the "Superneutrality" of money

? Prove the Superneutrality of money in a
Macroeconomic model in which money enters the
utility function of consumers in the economy.
4. Use an efficiency wage model to explain : (a) The

persistence of unemployment in economies;
(b) The relatively greater response of employment
rather than real wages to cyclical changes in
economic activity.
MEC-002 1 P.T.O.
SECTION - B
Answer any five questions from this section.
5x12=60
5. Explain how the IS curve is derived in the IS-LM
model of a closed economy.
6. Explain briefly Kydland and Prescott's argument

as to why policy rules must be time-consistent.
What are the possible ways by which policy rules
may be made credible ?
7. What are the possible advantages of a

Macroeconomic model with Microfoundations ?
What might be its potential drawbacks ?
8. Discuss what is meant by "Nairu".
9. What are the hypotheses of absolute and

conditional convergence ? Explain how one might
carry out a test of the hypothesis of absolute
advantage for a set of economies.
10. In the solow model of economic growth derive

the condition distinguishing the steady state
growth path with the maximum amount of
consumption per unit of effective labour.
11. Explain how the permanent income hypothesis

about consumption differs from the life cycle
hypothesis.
12. Discuss Goodwin's model of a business cycle based

on distributive conflict between capitalists and
workers.
MEC-002 2

I••••■
,,
June, 2011
Note : Answer any two questions Prow section-A and five

SECTION - A
Answer any two questions in about 500 words

each 2x20=40
1. Derive IS and LIVI curves. What are the
implications of these curves ? What are the factors
that influence these curves ?
2. Does steady state growth imply golden rule ?

Discuss in view of the Solow model of growth.
3. Policy makers should go by rules not by discretion.

Justify in light of the new classical
macroeconomics.
4. In a flexible exchange rate system, fiscal policy is

ineffective. Explain the above statement.
MEC-002 1 P.T.O.
SECTION - B
Answer any five questions in about 250 words
each. 5x12=60
5. Why do nominal and real rigidities occur in an
economy ? What are its implications ?
6. The downward sloping Phillips curve does not

remain stable in the long run. Substantiate with
appropriate diagram.
7. Why do growth rates in economies converge ?

Explain.
8. What is meant by rational expectations ? In what

respects is it different from adaptive
expectations ? Briefly point out some of its
implications.
9. Bring out the major issues highlighted by Lucas

in his criticism of Keynesian economics.
10. Briefly describe the theoretical insights of real

business cycles.
11. Critically examine the efficiency wage model.
12. Write short notes on :

(a) Permanent income hypothesis
(b) Endogenous growth
MEC-002 2

•••1'
O
December, 2018

SECTION - A
Answer any two questions from this section. 2x20=40
1. In the Solow model, what is the condition

required for steady state growth ? Explain the
effect of savings rate in this model.
2. Explain Lucas' critique of macroeconomic policy

evaluation. What is the role of microfoundations
in Lucas' critique ?
3. What do you understand by endogenous

growth ? What are its implications ? Discuss one
of the models of endogenous growth.
4. How does a country use fiscal and monetary

policies to correct a recession, given perfect capital
mobility ? Explain.
MEC-002 1 P.T.O.
SECTION - B
Answer any five questions from this section. 5x12=60
5. What is meant by a "Liquidity Trap" ? Why is
monetary policy ineffective in the presence of a
liquidity trap ?
6. Discuss how the concept of menu cost can be used

to explain rigidities in prices.
7. Bring out the salient features of real business cycle.
8. Explain how the Ramsey model is an

improvement over the Solow model.
9. Explain with appropriate diagrams how

monetary policy is ineffective in an open economy
with fixed exchange rate ?
10. Explain how the downward sloping short-run

phillips curve can be reconciled with the vertical
long run phillips curve.
11. Based on the assumptions of the Solow model,

explain why there should be convergence in
growth across countries.

(a) Classical dichotomy
(b) Insider-Outsider model of unemployment.
MEC-002 2
MASTER OF ARTS
7t, (ECONOMICS)
December, 2012
C
SECTION - A
1. An economy with flexible exchange rate and
perfect capital mobility should rely more on
monetary policy. Do you agree with the above
statement ? Support your answer with
appropriate diagrams.
2. The trade-off between inflation and

unemployment is a short - run phenomenon.
Comment.
3. Explain the equilibrium in an economy with the

help of IS and LM curves. What will be the shape
of the LM curve when the economy is passing
through a liquidity trap ?
4. What is meant by efficiency wage ? How does it

help in explaining regidities in an economy ?
MEC-002 1 P.T.O.
SECTION - B
5. Explain in brief the need for endogenous growth
models. What are the various types of endogenous
growth models ?
6. Bring out the major issues on which Robert Lucas

has criticised Keynesian models.
7. Bring out the relationship between average

propensity to consume (APC) and marginal
propensity to consume (MPC). Explain the role
of MPC on investment multiplier.
8 Explain the concept of 'golden rule' in the

neoclassical growth model. In what respects is it
different from steady state ?
9. What are the phases of a business cycle ? Explain

Kelecki's view on business cycle.
10. Do growth rates across economies converge ?

Explain.
11. Bring out the major insights of permanent income

hypothesis.
12. Write short notes on the following:

(a) Real business cycle
(b) Purchasing power parity
MEC-002 2
MASTER OF ARTS
(ECONOMICS)
co
r- Term-End Examination
©
tr) December, 2013
C

SECTION - A
1. What do you understand by steady state in the
neoclassical growth model ? Explain how steady
state is maintained when population growth and
technological progress are taking place.
2. What do you understand by endogenous

growth ? What are various models in endo genous
growth theory ? Discuss
3. Explain Lucas's critique of macro economic policy

evaluation. What is the role of micro foundations
in Lucas's critique.
4. Explain Rational Expectations hypothesis. How

can the unemployment inflation trade off be
explained on the basis of rational expectations ?
MEC-002 1 P.T.O.
SECTION - B
5. Explain with the help of an example the
mechanism through which the investment
multiplier operates.
6. How can the concept of menu costs be used to

rationalise nominal price rigidities ?
7. Explain the role of money using the overlapping

generations model.
8. Describe the salient features of the efficiency wage

theory.
9. Explain how a fixed exchange rate system works.

Explain how price adjustments take place under
such a system.
10. What is an IS curve ? Explain how equilibrium in

the goods market can be explained with the help
of the IS curve.
11. Explain the New Classical business cycle theory.
12. Briefly explain Kalecki's political business cycle

theory.
MEC-002 2

tr)
O December, 2016
r—

SECTION - A
1. Contrast the effectiveness of fiscal and monetary

policy in influencing the level of aggregate output
in an open economy with fixed exchange rates.
2. Explain and discuss the significance of the lucas

critique of econometric policy evaluation.
3. Describe the nature of the economy in the

overlapping generations growth model. Prove
that the steady state in such an economy can be
dynamically inefficient.
4. Describe a search and matching model of

unemployment and explain how such a model
can be used to show that employment responds
more strongly than real wages to changes in
economic activity during a business cycle.
MEC-002 1 P.T.O.
SECTION - B
5. What is meant by a "Liquidity Trap" ? Why is

monetary policy ineffective in the presence of a
liquidity trap ?
6. Explain how the LM curve is derived in the

IS-LM model of a closed economy.
7. Explain how, the introduction of the hypothesis

of rational expectations into Friedman's argument
as to the determination of equilibrium
unemployment implies that, the longrun average
rate of unemployment cannot be anything other
than the natural rate.
8. Describe the major components of the balance of

payments of a country.
9. Discuss how the concept of menu costs can be

used to explain nominal price rigidities in an
economy.
10. Describe the production technology and its

implications in the Solow growth model.
11. Explain the random walk hypothesis relating to

the time path of consumption in an economy.
12. Explain the cash-in-advance approach towards

modelling an economy with money.
MEC-002 2

N
O
0 Term-End Examination
V)
O June, 2012

SECTION-A
1. In the solov model, what is the condition required
for steady state growth ? Explain the effect of
increase in savings rate in this model.
2. Bring out the main criticisms labelled against

Keynesian model by Lucas. What has been the
impact of Lucas' critique on developments in
macroeconomic theory ?
3. By using IS-LM curves explain how equilibrium

in both real sector and monetary sector can be
attained ? What are the factors on which the
slopes of IS and LM curves depend ?
4. What do you understand by rigidities in an

economy ? Why do rigidities in wage rate and
price level take place ?
MEC-002 1 P.T.O.
SECTION-B
5. Explain why monetary policy is not effective in
an economy with fixed exchange rate ?
6. What is meant by rational expectations ? In what
respects is it different from adaptive
expectations ?
7. What are the phases of a business cycle ? Explain
how political business cycle theory explains the
fluctuations in output ?
8. Explain the rationale behind convergence in
growth rates across countries. Distinguish
between absolute convergence and conditional
convergence.
9. What is meant by natural rate of
unemployment ? Reconcile between the down
ward sloping short run phillips curve and the
vertical long-run phillips curve.
10. A government should stick to policy rules instead
of discretionary policies. Comment.
11. Bring out the major insights of search and
matching model of unemployment.
(a) Permanent income hypothesis
(b) Liquidity trap
MEC-002 2
MASTER OF ARTS
0" (ECONOMICS)
■.0
tr) Term-End Examination
June, 2013

SECTION - A
about 500 words each : 2x20=40
1. Explain the occurrence of real rigidities in goods

and credit markets.
2. How is the exchange rate determined under a

fixed exchange rate system ? Show that fiscal
policy is effective and monetary policy ineffective
under fixed exchange rate systems.
3. Explain the determination of equilibrium output

and interest rate in the IS-LM model. How are
the IS and LM curves derived ?
4. Describe the Overlapping Generations model.

Explain how multiple steady states are obtained
in such a model.
MEC-002 1 P.T.O.
SECTION - B
5. Critically examine the theory of political business
cycles as propounded by Kalecki.
6. Explain the important tenets of Real Business

Cycle theory.
7. Discuss the salient features of the search and

matching model.
8. Explain the difference in the concepts of adaptive

expectations and rational expectations.
9. Explain the views of Keynesians and New-

Keynesians on unemployment.
10. Explain the Fisherian concept of consumption as

an inter-temporal choice.
11. Explain the concept of steady state in the Solow

model. What is the impact of technological
progress on the steady state ?
12. Explain why aggregate supply curve is positively

sloped in the short run but vertical in the long
run ?
MEC-002 2
4 June, 2017
Note : Attempt questions from each section as per

instructions given.
SECTION A

1. Derive the condition for steady state in the

Solow model. In a diagram, show how it is
different from the golden rule. Is the golden rule
a stable condition ?
2. Explain briefly Lucas' critique of economic policy

evaluation. What is the importance of
microfoundations in Lucas' critique ?
MEC-002 1 P.T.O.
3. Consider the central planner's problem in the
Ramsey model. Derive the conditions for
modified golden rule. Intrepret the equation
with the help of a phase diagram.
4. What does the Phillips curve signify ? How do

you reconcile the shapes of the Phillips curve in
the short-run and the long-run ?
MEC-002 2
SECTION B

5. Bring out the main features of real business

cycle model.
6. Bring out the relationship between Average

Propensity to Consume (APC) and Marginal
Propensity to Consume (MPC). Explain the role
of MPC on investment multiplier. What are the
factors that may affect the value of multiplier ?
7. Why do rigidities occur in wage rate and prices ?
8. Bring out the main features of search models of

employment.
9. What do IS and LM curves signify ? What are

the implications of the shapes of these curves ?
10. Briefly discuss the implications of life cycle

hypothesis of consumption.
11. Bring out the salient features of overlapping

generation model.
MEC-002 3 P.T.O.
(a) Rational expectations hypothesis
(b) Ineffectiveness of monetary policy under

fixed exchange rate
MEC-002
No. of Printed Pages : 4 MEC-002 I
CI June, 2018
Note : Answer the questions from each section as directed.
SECTION A
1. Derive IS and LM curves. What are the

implications of these curves ? What are the
factors that influence these curves ?
2. "Policy makers should go " by rules, not by
discretion." Justify the above statement in light
of the new classical macroeconomics.
3. Describe the overlapping generations model.

Explain how multiple steady state is obtained in
such a model.
4. What is meant by rigidities in an economy ? Why

do rigidities in wage rate and price level take
place ?
MEC-002 1 P.T.O.
SECTION B
5. What is meant by natural rate of unemployment ?

Reconcile between the downward sloping
short-run Phillips curve and the vertical long-run
Phillips curve.
6. Bring out the major insights of search and

matching model of unemployment.
7. Do growth rates in economies converge ? Explain

your answer.
8. Explain the phases of a business cycle. How does

political business cycle theory explain the phases ?
9. Bring out the salient features of real business

cycle theory.
10. Distinguish between the concepts of adaptive

expectations and rational expectations.
11. Explain the concept of investment multiplier in

the presence of government sector. What are the
factors that influence the value of the multiplier ?

(a) Efficiency Wage Model
(b) Permanent Income Hypothesis
MEC-002 2

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No.

of Printed Pages : 4 I MEC-0021

MASTER OF ARTS (ECONOMICS)

Answer any two questions in about 500 words

2. What is meant by business cycle ? How do the

3. What is meant by rational expectations ? What

4. Explain how internal and external balance are

Answer any five questions in about 250 words

5. Critically examine the endogenous growth theory.

6. How do you derive the LM curve ? What are the

7. Why do firms not change their price frequently

8. Why do firms offer a higher wage rate to workers

9. Critically examine the political business cycle

10. Bring out the main tenets of permanent income

11. Examine the points raised by Lucas while

12. Write short notes on the following :

MEC-002 : MACROECONOMIC ANALYSIS

Time : 3 hours Maximum Marks : 100

2. Fiscal policy in an open economy with flexible

3. Explain equilibrium output and interest rate on

4. What do you mean by real rigidities ? Why do

5. Discretionary fiscal policy may not be good for

6. Discuss the salient features of real business cycle

7. Explain how Phelp's golden rule is an

8. What are the issues on which Lucas criticises

9. Explain why aggregate supply curve is positively

10. Bring out the major insights of permanent income

11. What is endogenous growth model ? What are

12. Write short notes on the following :

MASTER OF ARTS (ECONOMICS)

MEC-002 : MACROECONOMIC ANALYSIS

Time : 3 hours Maximum Marks : 100

Note : Attempt questions from each section as directed.

1. Explain the role of Human Capital and R & D in

2. HOw can life cycle hypothesis solve Kuznets'

3. How does a country use fiscal and monetary

4. What is Steady State ? Explain the Golden Rule

5. Explain the main features of classical dichotomy.

6. "IS — LM analysis is neo-classical synthesis."

7. What are the implications of random walk

Explain the idea of intertemporal maximization of

9. Distinguish between adaptive and rational

10. Compare and contrast J. Schumpeter's and

11. Explain the two-period overlapping generations

12. What are the main features of search models of

13. Briefly explain the following :

MEC-002 : MACROECONOMIC ANALYSIS

Time : 3 hours Maximum Marks : 100

Note : Answer questions from each section as directed.

Answer any two questions from this section in about

1. What is meant by steady state ? Derive the

3. What is meant by Phillips curve ? What are its

4. Monetary policy is not effective in an economy

5. Bring out the relationship between Average

6. What is efficiency wage theory ? What are the

7. What is meant by Lucas critique ?

8. Bring out the major tenets of search models of

9. Why do rigidities occur in real wage and in

10. Explain the phases of a business cycle. How does

11. Bring out the rationale for endogenous growth

12. Write short notes on the following :

MASTER OF ARTS (ECONOMICS)

Time : 3 hours Maximum Marks : 100