Theory of Employment, Output, Inflation, Money and Finance (IEcoS (Economic Services) Economics Paper-2): Questions 1 - 11 of 13

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Question number: 1

» Theory of Employment, Output, Inflation, Money and Finance » The Classical Theory of Employment and Output and Neo Classical Approaches

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Essay Question▾

Describe in Detail

Explain the Harrod- Domar model and bring out the differences between the two versions.

Explanation

Harrod- Domar model was developed as a reaction to Keynes’ analysis in 1950s. Harrod and Domar models differ in details but basically, they are similar in substance. Both the models highlight the essential conditions for achieving and maintaining steady growth.

Image shows Harod- Domar Model

Image Shows Harod- Domar Model

Image shows Harod- Domar Model

  • Ideas of Keynesian

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Question number: 2

» Theory of Employment, Output, Inflation, Money and Finance » Keynesian Theory of Employment and Output

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Appeared in Year: 2018

Essay Question▾

Describe in Detail

What are similarities and difference between the Keynesian and Monetarist models?

Explanation

Image of the Keynesian view and Monetarist view

Image of the Keynesian View and Monetarist View

Image of the Keynesian view and Monetarist view

  • Keynesian models emphasize the role of fiscal policy in stabilizing the economy. In particular Keynesian theory suggests that higher government spending in a recession can help enable a quick economic recovery.

    • Keynesians say it is a mistake to

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Question number: 3

» Theory of Employment, Output, Inflation, Money and Finance » The Classical Theory of Employment and Output and Neo Classical Approaches

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Appeared in Year: 2018

Essay Question▾

Describe in Detail

What is liquidity trap? Discuss the effectiveness of monetary policy and fiscal policy in this context?

Explanation

At a very low rate of interest, the liquidity preference becomes perfectly elastic and the speculative demand for money is infinitely elastic.

  • This portion of the curve indicates the position of absolute liquidity preference of the people. At a very low rate of interest, people will hold with them as inactive balances any amount of money they

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Question number: 4

» Theory of Employment, Output, Inflation, Money and Finance » Classical Theory on Money » Neutrality of Money

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Appeared in Year: 2018

Essay Question▾

Describe in Detail

Explain the neutrality of money.

Explanation

The neutrality of money is an economic theory which states that changes in the money supply only affect nominal variables and not the real variables.

  • In other words, an increase or decrease in the money supply can change the price level but not the output of the economy.

  • According to classical theory, the nominal variables move in proport

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Question number: 5

» Theory of Employment, Output, Inflation, Money and Finance » The Inflationary Gap » Demand Pull Versus Cost Push Inflation

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Appeared in Year: 2011

Essay Question▾

Describe in Detail

Explain the concept of inflationary gap.

Explanation

Inflationary gap arises when consumption and investment spending together is greater than the full employment GNP level.

  • This means that people are demanding more goods and services than can be produced.

  • In other words, the amount by which the actual aggregate demand exceeds the level of national income corresponding to full employment is

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Question number: 6

» Theory of Employment, Output, Inflation, Money and Finance » The Classical Theory of Employment and Output and Neo Classical Approaches

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Appeared in Year: 2011

Essay Question▾

Describe in Detail

Explain the speculative demand for money and its relationship with the ‘liquidity trap’.

Explanation

Speculative Demand for Money: Money is also demanded as an asset.

  • The speculative demand for money is for securing profit from knowing better than the market what the future will bring forth.

  • Money held for speculative purposes is a liquid store of value which can be invested at an opportune moment in interest bearing bonds or securities.

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Question number: 7

» Theory of Employment, Output, Inflation, Money and Finance » Keynesian Theory of Employment and Output

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Appeared in Year: 2011

Essay Question▾

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What are the implications of the Phillips curve for economic policy?

Explanation

The Phillips curve has important policy implications. It suggests the extent to which monetary and fiscal policies can be used to control inflation without high levels of unemployment.

  • In other words, it provides a guideline to the authorities about the rate of inflation which can be tolerated with a given level of unemployment.

  • For this

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Question number: 8

» Theory of Employment, Output, Inflation, Money and Finance » Keynesian Theory of Employment and Output

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Appeared in Year: 2015

Essay Question▾

Describe in Detail

Why is the Keynesian Range referred to as the ‘Liquidity Trap’?

Explanation

  • At a very low rate of interest, the liquidity preference becomes perfectly elastic and the speculative demand for money is infinitely elastic.
  • This portion of the curve indicates the position of absolute liquidity preference of the people. At a very low rate of interest, people will hold with them as inactive balances any amount of money they

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Question number: 9

» Theory of Employment, Output, Inflation, Money and Finance » Classical Theory on Money » Neutrality of Money

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Appeared in Year: 2016

Essay Question▾

Describe in Detail

Distinguish between inside and outside money.

Explanation

  • Inside money is created inside the private sector. It is mainly used to identify debt which is considered as an asset to the holder but a liability to other such as the debt issuer.

    Inside money includes bank deposits that exist as a result of the loan creation process. It is the dominant form of money in the modern economy and as the economy

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Question number: 10

» Theory of Employment, Output, Inflation, Money and Finance » The Inflationary Gap » Demand Pull Versus Cost Push Inflation

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Appeared in Year: 2017

Essay Question▾

Describe in Detail

Compare and contrast demand pull and cost push inflation.

Explanation

Demand pull inflation refers to a situation in which aggregate demand at the existing price level far exceeds aggregate supply of goods and services. Such inflation occurs due to excessive demand. Factors responsible for this:

  • The major source of inflation is increase in money supply in the economy.

    Increase in money supply results from an

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Question number: 11

» Theory of Employment, Output, Inflation, Money and Finance » The Inflationary Gap » Philip's Curve and Its Policy Implication

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Appeared in Year: 2015

Essay Question▾

Describe in Detail

The following functions are estimated for an economy:

Consumption Function:

Investment Function:

Government Purchases:

Real demand for money:

Real money supply:

Now Estimate the equation for the IS curve and the LM curve. Also find out the equation of AD curve. Find equilibrium values of P, r, C and I.

Explanation

a) Is equation

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