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Course: Generic Elective Economics (2 Semester) Faculty: ISHA GUPTA Subject: Introductory Macroeconomics

The document provides an assignment for a macroeconomics course. It contains 3 questions with multiple parts asking students to: 1) Solve equilibrium output models with different consumption, investment, and money demand functions, and compare the resulting multipliers. 2) Explain key differences between Keynesian and classical models, define a business cycle and how unemployment behaves over it, and how automatic stabilizers affect output fluctuations. 3) Define measures of economic activity, private saving, and the relationship between private and national saving. The assignment is worth 25 marks total and has a submission deadline of July 26th at 5:00pm, with a 5 point penalty for late submissions. It also outlines academic honesty

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Akansha Jaiswal
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81 views2 pages

Course: Generic Elective Economics (2 Semester) Faculty: ISHA GUPTA Subject: Introductory Macroeconomics

The document provides an assignment for a macroeconomics course. It contains 3 questions with multiple parts asking students to: 1) Solve equilibrium output models with different consumption, investment, and money demand functions, and compare the resulting multipliers. 2) Explain key differences between Keynesian and classical models, define a business cycle and how unemployment behaves over it, and how automatic stabilizers affect output fluctuations. 3) Define measures of economic activity, private saving, and the relationship between private and national saving. The assignment is worth 25 marks total and has a submission deadline of July 26th at 5:00pm, with a 5 point penalty for late submissions. It also outlines academic honesty

Uploaded by

Akansha Jaiswal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Ramanujan College

(University of Delhi)

Course: Generic Elective Economics (2nd Semester)


Faculty: ISHA GUPTA
Subject: Introductory Macroeconomics

Answer all the Questions.

Q1. Answer the following questions:

a) Consider first the goods market model with constant investment.


Consumption is given by C = c0 + c1 (Y − T) and I, G and T are given.
Solve for equilibrium output. What is the value of the multiplier?
b) Now assume that investment depends on both output and interest rate:
I = b0 + b1Y – b2i
Other components remain the same as in part (a).
Solve for equilibrium output. At a given interest rate, is the effect of a
change in autonomous spending bigger or smaller than what it was in part
(a)? Why? (Assume c1 + b1 < 1) .
c) Assume the LM curve equation as (M/P) = d1Y – d2i.
Solve for equilibrium output. Derive the multiplier.
d) Is the multiplier you obtained in part (c) smaller or larger than the
multiplier you derived in part (a)? Explain how your answer depends on
the parameters in the equations for consumption, investment and money
demand.
(2 + 3 + 2 + 3 = 10 Marks)

Q2. Answer the following questions:


a) The model of income determination is called a Keynesian Model. What
makes it Keynesian, and not classical? Elucidate your argument.
b) What is a business cycle? Explain its phenomenon. How does the
unemployment rate behave over the course of a business cycle?
c) Why do we call mechanisms such as proportional income taxes automatic
stabilizers? How and why it affects fluctuations in output? Explain this
mechanism carefully.
(3 + 3 + 4 = 10 Marks)

Q3. Answer the following questions:


a) What are the three approaches to measuring economic activity? Why do
they give the same answer?
b) Define private saving. How is private saving used in the economy? What
is the relationship between private saving and national saving?
(2 + 3 = 5 Marks)
Total Weightage: 25 Marks
Submission Deadline: 26 July 2021 (Monday) by sharp 5:00 pm.
[Any submission after this deadline will lead to a penalty of (-5) for that student]

Rules of Academic Honesty& Integrity


1) This assignment submitted for evaluation must be student’s own work.
2) All acts of academic dishonesty such as plagiarism, cheating, fabrication or
blatant copying of other student’s academic work are serious offences.
3) Any act of academic dishonesty would immediately lead to ZERO marks for that
student.
4) If any two or more case-study assignments are found to be similar in any respect,
then it would immediately lead to ZERO marks for all these respective students,
irrespective of who copied from whom.
5) Any submission after the above-mentioned deadline of 26 July 2021 (Monday
5:00 pm) will lead to a penalty of (-5) for that student.
6) For any doubt or help regarding this assignment, students must consult the faculty
through MS Teams.
7) Only HAND-WRITTEN Assignments would be considered for evaluation and
final scores. No typing or printed sheets would be corrected. Note this carefully.

GOOD LUCK!

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