The coursework assignment for this module is an individual assignment worth 30% of the overall module mark.

Coursework Brief

Answer All Questions

1.      Suppose that the economy is in a recession and assume that the IS curve is relatively steep while the LM is relatively flat. If you were to advise the policy makers on which action to take, what would be your advice? Show the results graphically with explanation.  

(60 marks)

2.      Suppose the economy is characterised by the following set of equations:

[where C, are consumption, disposable income ,income and taxes respectively. is investment.  is government spending and it is constant/ exogenous. Also note investment is proportional to output.]

(a) Solve for equilibrium output.

(b) What is the multiplier? How does the relation between investment and output affect the value of the Keynesian multiplier?

(c) For the multiplier to be positive what condition must   satisfy?

(40 marks)

(Total 100 marks)

Key Marking criteria will include:

·   Initiative: originality, innovativeness of answer

·   Assignment Structure: clarity of aims, objective, structure and presentation

·   Quality of Writing: Readability and ability to convey key message(s) concisely

·   Quality/Scope of Literature Review: Understanding of established knowledge

·   Suitability of Literature: Use of suitable sources, focused to answer key research aims

·   Literature Analysis: Quality/level of analytical skill demonstrated

·   Insightfulness of Analysis: Interest and usefulness of findings, conclusions drawn.

·   Understanding: Assignment demonstrates students have understood key topics

·   Overall Quality of Assignment