ECO 403 SUBJECTIVE QUESTIONS
Q 43) Differentiate between short run and long run (3)
Q 44) "Pension of the government workers is a liability for the government" How? (3)
Q45) what is the difference between life-cycle hypothesis and the Keynesian consumption functions? (3)
Q46) suppose two countries have identical constant return to scale production function and start with the same capital stock per worker. Both countries have a population growth rate of 2 percent and a depreciation rate of 10 percent. The saving rate, however difference in each country. Country A saves 20 percent of its income. While country B saves only 15 percent. Suppose that the population growth rate in country A increase to 5 percent. Which country will have the higher steady state level of capital per worker? (5)
Q47)In 1979, budget deficit was $20 billion government debt was $495 billion and inflation was 8%. By using this information calculate by how much amount the budget deficit was over started? What is the amount of surplus budget deficit? (5)
Q48) (A) Define Philips Curve. Also explain this curve with the help of diagram (5)
(B) Graphically show the impact of a decrease expected inflation on the Philips curve. (5)
Question No: 26 ( Marks: 5 )
Define hyperinflation. What causes hyperinflation? Also explain briefly why government creates hyperinflation.
Question No: 27 ( Marks: 5 )
What are the advantages of floating exchange rates and fixed exchange rates?
Question No: 28 ( Marks: 5 )
Define budget deficit and government debt. Also write down the major components of government debt.
Question No: 29 ( Marks: 10 )
Discuss the policies to promote economic growth.
Question No: 30 ( Marks: 10 )
Explain Milton Friedman’s permanent income hypothesis.
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