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QUESTION ONE
Explain, using the Keynesian approach to measuring aggregate demand, the economic impact that a discovery of a precious resource such as oil will have on aggregate spending and total production (income) for an economy. Substantiate your answer with the aid of a suitable diagram.
QUESTION TWO
There is a range of arguments that exists in economic theory against the use of fiscal policy for control of a national economy. Discuss this statement in terms of the main lags that a government can experience in its implementation of fiscal policy.
QUESTION THREE
- Assume a country experiences favourable exchange rates. Examine the ONE main type of inflation this event can lead to. Illustrate your answer with the aid of a diagram.
- Explain, with the aid of a diagram, the effect of increased government spending on the IS-LM model. (Assume all other variables are held constant).
QUESTION FOUR
Provide a critical evaluation of imports and quotas as instruments to regulate international trade and to protect a country’s terms of trade.
This is a research based assignment and requires evidence of research
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