Management Notes

Reference Notes for Management

Introductory Macroeconomics – Old Question Paper 2014 | Semester: Fall

Introductory Macroeconomics Old Question Paper 2014 | Semester: Fall

Introductory Macroeconomics

Old Question Paper 2014 | Semester: Fall

Exam 2014 Fall

1. a. Why is macroeconomics called a policy science? Explain the main issues that are focused in macroeconomics study. [7]
b. Show the circular flow of income and expenditure in an open economy. [8]

2. a. Define real GDP. How do you differentiate between GDP at factor cost and GDP at market price? [8]
b. Calculate national and personal income from the following information:

Items Amount in Rs. Millions
Household expenditure on consumption of goods 100
Investment expenditure 50
Government expenditure 60
Income from abroad 150
Depreciation 10% of GDP
Indirect taxes 70
Subsidies 10
Payment to abroad 30
Import 10
Export 80

3. a. Explain the summary model of the classical theory of output and employment with appropriate diagrams. [8]
b. Explain the effective demand theory of the determination of employment. [7]

4. a. Define marginal propensity to consume. Illustrate the basic premises of the psychological law of consumption. [8]
OR
Explain the process of determining the equilibrium rate of interest under the Liquidity Preference Theory of Interest.

b. Illustrate and explain what happens in general equilibrium under the IS-LM framework: [7]
i. If government expenditure increases but demand for and supply of money remain constant
ii. If the money supply increases but investment and saving remain the same.

5. Suppose a model is given as follows:
C=100 +0.75Yd;(where Yd = disposable income)
I= 250 million, G= 100 million and T= 100 million
Find
a. Equilibrium level of income and saving. [5]
b. Change in equilibrium income if G increases to 200 and I decreases to 150 million. [5]
c. Balance budget multiplier. [5]

6. a. Consider a two sector model with following equations. [8]
C=20 +0.5Y, I=200-2000i,
Mt =0.5Y, Msp = 105-1500i

Find
i. IS and LM functions
ii. Equilibrium income and interest
b. Define monetary policy. Explain the objectives of monetary policy in developing countries. [7]

7. Write short notes on any two: [2×5=10]
a. Marginal efficiency of capital
b. Philip’s curve
c. Phases of the business cycle.

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Introductory Macroeconomics – Old Question Paper 2013 Spring | Pokhara University

Introductory Macroeconomics Old Question Paper 2013 Spring

Introductory Macroeconomics Old Question Paper 2013 Spring

Exam 2013 Spring

1. a. Define macroeconomics. Explain the basic issues of Macroeconomics which are more concerned with macroeconomics phenomena. [7]
b. How to define withdrawals and injections in an economy? Explain the circular flow of income and expenditure in four sectors economy. [8]

2. a. Summarize the method of estimating national income? Explain the various difficulties of measuring national income in developing countries like Nepal. [8]
b. Explain and illustrate graphically the classical theory of employment and output determination. [7]

3. a. How the two determinants of the effective demand are considered as the key factors to the process of determining the level of employment in the economy? Explain. [8]
b. What do you mean by Keynes’s psychological law of consumption? Explain the measures to raise the propensity to consume. [7]

4. a. Define autonomous and induced investment. Explain marginal efficiency of capital. [8]
b. An economy is characterized by the following equations:
C=60+0.9 Yd, I=10, G=0,T=0, X=20 ,M=10+0.05Y where symbols have their usual meaning. Find the equilibrium level of income. Calculate the trade balance and interpret your result. [7]

5. a. What is the effect of export multiplier in the equilibrium level of income of four sector economy? [8]
b. Define Keynes’s liquidity preference theory of interest. How does it been criticized? Explain briefly. [7]

6. a. Using IS- LM model, explain what happens to the equilibrium interest rate and income under the following circumstances [8]
i. The central bank increases money supply.
ii. The government increases taxes.

b. Suppose structural model for the product market is given as [7]
C=200+0.70 200(Y-T) ;I=200- 250i ;G=200 and T=0.25
Similarly, The money market model is given as: Mt=0.6 Y; Msp=200-3500i and Ms=200.
Where, the symbols have their usual meaning. Find, the equilibrium value of income and rate of interest.

7. Write short notes on any TWO: [2X5=10]

a. Demand-pull inflation
b. Four phases of business cycle
c. Tools of fiscal policy

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