MEC-002: MACROECONOMIC ANALYSIS
Section A
Answer the following questions in about 700 words each. Each question carries 20 marks. 2X20=40
1. In the context of the Solow model, explain the condition under which an economy attains steady state. Use appropriate diagram and equation to illustrate your answer.
2. What are the implications of IS and LM curves? What are the factors on which the position and the slope of IS and LM curves depend?
Section B
Answer the following questions in about 400 words each. Each question carries 12marks 5X12=60
3. Explain the mechanism through which internal and external balance takes place under flexible exchange rate.
4. What does the Phillips curve signify? How do you reconcile the difference in the shape of the curve in the short run and the long run?
5. Critically evaluate the endogenous growth theory.
6. Classify various theories of unemployment based on the possible responses of the firm.
7. Write short notes on the following:
a) Menu cost
b) Permanent income hypothesis
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