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Reg. No. : .................................... Name : .........................................
Second Year B.A. Degree Examination, March 2009 Part – III – Group – III : ECONOMICS Paper – II : Macro Economics (New Scheme – 2005 admn. onwards) Time : 3 Hours
Max. Marks : 100
Instruction: Answers may be written either in English or in Malayalam. I. Choose the correct answer. Write only the alphabet. 1) _________ is a stock. a) NI during 2007 b) NI during March, 2000
examquestionpapers.com c) NI on 31 March, 2008
d) Investment 2) Restatement of the quantity theory of money is a theory of a) Expectations b) Rational expectations c) Demand for money d) General price level 3) Inflation is a) Increase in money supply b) Rise in price c) Rise in price level d) General and sustained rise in the price level
P.T.O.
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4) At natural rate of unemployment a) The rate of increase in money wages is equal to the rate of increase in prices b) The real wage is constant c) No distrubance in the labour market d) All the above 5) Operating surplus is a) Profit b) Profit minus depreciation c) Income from asset and entrepreneurship d) Value added minus depreciation
(5×1=5 Marks)
II. State whether true or false : 6) Industrial production and consumption are procyclical. 7) Classicals believed that disturbances in equilibrium is permanent.
examquestionpapers.com 8) The real and monetary sectors are different in the classical system.
9) Cambridge economists made a distinction between demand for and supply of money. 10) Milton Friedman argued that Philips curve should not be set in terms of the rate of change of real wages. (5×1=5 Marks) III. Fill in the blanks : 11) According to Lipsey, there is ________ relationship between the rate of increase in money wages and excess demand. (negative/positive) 12) ___________ is a part of Friedman’s demand function for real money balances. (nominal income/tastes and preferences of an individual) 13) The effect of falling prices on real wealth and consumption expenditure is related to ___________ (Fischer effect/Pigou effect) 14) An increase in government expenditure shifts the IS curve to the ___________ (left/right) 15) According to orthodox Keynesians, the economy is basically ___________ (unstable/stable) (5×1=5 Marks)
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IV. Define any four of the following : 16) Return on financial assets. 17) Macro model. 18) Endogenous variable. 19) Non-monetised sector. 20) Accounting matrix.
(4Ă—1=4 Marks)
V. Answer any seven of the following in not more than half a page. 21) Wage rigidity. 22) Cash-balance approach. 23) Interest inelastic investment. 24) Distinguish between barter and non-barter economy.
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25) Leakages in circular flow.
26) Classical theory of interest. 27) Depression and fiscal policy. 28) Labour productivity and aggregate supply. 29) Collective bargaining and expected inflation. 30) Rigidity and flexibility.
(7Ă—3=21 Marks)
VI. Answer any six of the following, in not more than one page each. 31) Explain money multiplier in algebraic terms. 32) What is the policy implication of stagflation ? 33) Is quantity theory of money demand biased ? 34) Justify the argument that classical theory is supply oriented. 35) Explain the determinants of saving-investment equality in classical and Keynesian approaches.
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36) Show the equality between income and expenditure in NI accounting. 37) What is the role of effective demand in the context of global recession ? 38) What is additional investment ? Explain the nature of investment function. 39) How can wage flexibility helpful to achieve labour equilibrium ? 40) Discuss the inter-relations between micro and macro economics.
(6×5=30 Marks)
VII. Answer any three of the following not exceeding three pages each : 41) What is IS – LM model ? Explain the role of monetary policy in this context. 42) In what way Friedman’s restatement of quantity theory is superior to quantity theory of money ? 43) Distinguish between neutrality and non-neutrality of money. Has this conceptulisation any role in explaining classical dichotomy ? 44) What are the determinants of an investment function ?
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45) What is the role of profit in the computation of NI ? Compare the various methods of estimating NI. 46) Explain the nature of MPC and APC in the context of relative and permanent income hypotheses. (3×10=30 Marks) ———————