Search & Filtering
1. In the traditional macroeconomic framework (under open or closed economy), all macroeconomic variables can somehow be categorized as part of the aggregate demand and aggregate supply with equilibrating prices. List as many macroeconomic variables as possible and categorize them under sub-equilibrium and eventually under demand supply
framework. [Hint: Use the goods market, the money market, the labor market equilibrium, and technology].
8. Stabilizing effects of deflation: In the IS-LM framework, how does a decline in price affects equilibrium level of income? The Pigou Effect: Arthur Pigou, a classical economist of the 1930s, argued that a fall in price increases real money balances thereby inducing consumers to feel wealthier and spend more. What would be the impact of a decline in
prices on equilibrium income in this Pigou’s spirit?
42. On the structural transformation:
(a) Define structural transformation.
(b) List and discuss at least three stylized facts of structural transformation.
(c) Are high growth in per capita income and high rate of capital accumulations the sufficient conditions for structural transformation to occur? Explain
41. Consider two cultures X and Z. In culture X, parents live for their children and grandchildren where their current income is divided among current consumption, saving for retirement, and investment in the education of their children. In culture Z, children are born as assets for their parents so that the current generation expects to be taken care
of by the future generation. Output produced by the younger generation is divided into proceed and bequest for parents, and investment for future self-sufficiency.
(a) What is the direction of flow of resource of investment in the two cultures?
(b) What is the implication of the two cultures for growth?
0. Which form of aspiration failure is difficult to change through socioeconomic policies?
39. Why is that difficult to escape underdevelopment in a polarized society?
How does this explain the fact that middle income countries grow faster than both low and high income countries?
39. Why is that difficult to escape underdevelopment in a polarized society?
How does this explain the fact that middle income countries grow faster
than both low and high income countries?
35. The theory of convergence is not addressed in the Romer’s model of endogenous growth as the model is relevant to developed countries. What is the avenue by which the theory of convergence can be maintained in such endogenous growth models? What are the determinants of this avenue?
34. Suppose the production function for a newly discovered product through research is given by Y = 100 (L - F ) where Y = output of the new product, L = labor input, and F = fixed amount of labor input required to invent the idea (cost incurred before the first unit of output
can be produced). Assume that there is no production if L < F ; and each unit of labor L costs a wage rate w.
(a) Find the cost function C(y) that represents the minimum cost required to produce Y units of output.
(b) Given a price P which the firm faces for each unit of output produced, show that the firm cannot make profit and operate in perfectly competitive market settings.
33. Compare the impact of population growth rate on level of per capita income in the Solow growth model and Romer’s endogenous growth model with deliberate investment in R&D.
