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Introductory Macroeconomics – Old Question Paper 2011 | Semester: Fall

questionIntroductory Macroeconomics
Old Question Paper
Year: 2011 | Semester: Fall
Pokhara University


Exam 2011 Fall

Attempt all the questions.

1. a. Define macroeconomics and describe its limitations. [7]
b. What is meant by withdrawals and injections in an economy? Illustrate the circular flow of income and expenditure of a three sector economy. [8]

2. a. What is national income? Describe the difficulties of its accounting? [8]
b. From the following data compute: [7]
i. Real GNP
ii. GNP deflator and rate of inflation

Year Nominal GNP (in billions) Wholesale PIN (2000-01=100)
2005-2006 54195 228.1
2006-2007 61583 251.0

3. a. Explain the basic model of classical theory of output and employment. [8]
Explain the determination of employment under principle of effective demand.
b. Define age and marginal propensity to consume. Illustrate the psychological law of consumption. [7]

4. a. Compute Y (National Income), C(Consumption),S(Saving) and Yd(Disposable income) with the help following information.
C= 100+0.8 Yd
b. Find change in equilibrium income if G increases to 200 and I decreases to 400 in question number 4(a). [7]

5. a. What curve? How do you derive it? [7]
b. Write about the Loanable Fund Theory of Interest. [8]
6. a. Define monetary policy and its objectives. [7]
b. What is investment multiplier? What are the possible leakages in the multiplier principle? [8]
7. Write short notes on any two: [2×5=10]
a. Marginal efficiency of capital
b. Phases of business cycle
c. Say’s Law of market


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