Macroeconomics – II — DU B.A. (Hons.) Business Economics (BBE) Previous Year Question Papers

B.A.(H) Busine.ss Economics questions from the rest. Ql) Write short note on aE]L± of the following Distinction between Transitory and Permanent components of Income Causes for a shift in Aggregate Sirpply Curve Natural Rate of Unemployment and Natural level of Output PurchasingPowerParityApproach (3x6=18 marks) Q2) Discuss the fundamental tenets of the Neoclassical Model of Investment. Formally derive the relationship between marginal productivity of capital and the real cost of borrowing. Explain the limitations of this theory in a real-world context. (18 marks) Q3) Do you agree "Expectations play a central role in determining inflation-unemployment dynamics?" Justify your answer with reference to expectations-augmented Phillips Curve? Q4)HownaturalrateofunemploymentisdeterminedunderWageSettingandPriceSetting relations? Do you think that firms profit margin policy affects natural level of unemployment? Justify your answer. Q5) Explain the impact of a decrease in budget deficit on output and the price level in the short run and medium run, with reference to the natural level of output. Substantiate your answer with suitable diagram. (18 marks) Q6) Do you agree that fiscal policy has powerful effects under perfect capital mobility and floatingexchangeTates?Justifybyshowingbowdoesanexpansionaryfiscalpolicyinfluence exchange rates and output in an economy with a floating exchange rate? (18 marks)