Introductory Macroeconomics – Old Question Paper 2006 | Semester: Spring

questionIntroductory Macroeconomics
Old Question Paper
Year: 2006 | Semester: Spring
Pokhara University

Exam 2006 Spring

1. a. What are the distinctions between macroeconomics and microeconomics? [7]
b. Construct a diagram of circular flow of income and expenditure in four sector open economy. Explain the linkages between household sector, business sector, financial sector, government sector and foreign sector [8]

2. a. What is national income? How it can be measured using income method? [7]
b. What is effective demand? How is it determined? Describe. [8]

3. Explain theory of employment and output. What are its criticisms? [15]

4. a. What is consumption function? What are the measures to raise the propensity to consume? [5]
b. Explain the liquidity preference theory of interest. [5]
c. What is inflation and inflationary gap? [5]

5. How equilibrium level of income is determined in a three-sector closed economy? Explain the role of government to increase the national income and output in the economy

6. Define IS and LM curves. Derive IS and LM curves. Use IS-LM model and explain the effects of following economic policies: [15]

a. Expansionary fiscal policy
b. Concretionary monetary policy.

7. Write short notes on (Any Two): [5×2=10]
a. GDP deflator Vs. CPI
b. Marginal Efficiency of Capital
c. Tools of Monetary Policy

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