Intermediate Macroeconomics I: Foundations of Aggregate Income Determination — DU B.A (Prog.) Economics as Major Previous Year Question Papers

Using the data in the Table-1 below, draw the aggregate production function curveandthecorrespondingmarginalproductivityoflabour(MPN)curves.Identify the area on the MPN curve that exhibits diminishing returns. N=LabourY-Output 0 1 2 3 4 5 6 7. Elaborate upon the Cambridge approach to the quantity theory of money. What are the sources of nominal wage rigidity according to the Keynesian theory? Discuss Friedman's theory of natural rates of unemploynient and output. Illustrate the natural rates of employment and output using a suitable diagram. What is the Keynesian interpretation of the Philips curve? How does it differ from the natural rate theory in terms of policy conclusions? Elaborate. What is.the key assumption behind the life cycle hypothesis? Illustrate the pattern of lifetime income, consumption, saving, and wealth in the life - cycle model in terms of a suitable diagram. Is there a relation between stock market and the cost of capital? In this context, describe the q theory of investment. "In the Classical model, labour supply depends positively on the real wage". Derive Keynesian aggregate demand schedule from IS-LM model. How does an increase in money supply affect the aggregate demand schedule? Elaborate upon Friedman's analysis of the long-run effects of monetary policy. How do they differ from the corresponding short-run effects? 4. Derive the Keynesian aggregate supply curve with the assumption of fixed money wage. Explain how aggregate supply responds to a change in the price level along the Keynesian aggregate supply curve. 5. What are the general characteristics and criticism of theory of adaptive expectations? Explain with a suitable example. 6. Suppose that a person starts life at age 20, plans to work until age 65, and will die at age 80 and that annual labour income, YL, is $30,000. From this information, calculate the following figures for this person: (i) lifetime resources, (ii) annual consumption, (iIi) marginal propensity to consume, (iv) maximum wealth accumulated. What would be the increase in his annual consumption if (a) income were to rise permanently by $3,000 per year (at age 20), and (b) income were to rise by $3,000 but only for one year (at age 20)? Calculate MPC out of permanent income and transitory income for cases (a) and (b) above. 7. What is desired capital stock? Discuss the determinants of desired capital stock. a İcal Model (Aggregate Production Function) feat 7. ras-a (SECTION-B) (i) 31v|a a (Lifetime resources), ) 34(Anual consumption), (iv) # 8 s (Maximum wealth)!