This question paper contains 4+2 printed pages} Roll No. LU] S.No. of Question Paper : 6008 Unique PaperCode —: 227302 G Name of the Paper : Intermediate Macroeconomics 1 Nameofthe Course _: B.A. (Hons) Economies Semester 2M Duration :3 Hours Maximum Marks : 75 (Write your Roll No. on the top immediately on receipt of this question paper.) (a wea & fret at am feu ay fuiita ea HR or aia fear 1) Note : Answers may be written either in English or in Hindi; but the same medium should be used throughout the paper. feorot : ga Wer-9a wT SR iH oT ee fet WH oF ifm, afer aM a mem w& a at afer | Attempt any two parts from each question. Each part carries 7% marks. All the notations have their standard interpretation. yas we Soa et am gifs wee aM 7y te HT BI wa ort a arr ane uta 31 1. @_ (@_ Ina goods market equilibrium in closed economy, $ + TA - TR = 1 + G, use this equation to show that a fiscal expansion will lead to an incomplete crowding out effect. 25 (i) Show using AD-AS and IS-LM curves why money is neutral in the classical * Supply case. 5) © (2) 6005 Using wage setting and price setting relations, determine the equilibrium real wage rate. Explain how these curves are affected by each of the following: 4.543 () An increase in price of oil (i) An inerease in mark up. How does a fiscal contraction (reduction in budget deficit) affect price, output and interest rate, both in short run and medium run in AD-AS model ? 7S (MO aq store # aq am 4 s+ TA-TR=1+6, 78 wie & seh @ cal fe ee wsahia fren @ apt wifen ae wre em @ AD-AS 4 IS-LM aa a sein ae wale, wero off at fafa 4 ag qe wie 2 (@) wat afer a sins Afén geri ar sain ach, arate aed ager fruffer sifre) ameee fe Fa was ffafaa a a am waar aa %, @ wa a sim a afs: @) Teen FA afi @) AD-AS Hee 7 aera a Wem are SH #, Fa we da (ame ue Wo adt) sina, sey a ara a ow uefa ata @?@ @) © (3) 6005 What do you mean by natural rate of unemployment ? Derive Modified Phillip's Curve. 245.5 “Wage Indexation increases the effect of unemployment on inflation.” Explain this ‘statement. 75 Explain Lucas ‘Credibility’ theory. In this coritext discuss Fisher's theory of nominal wage rigidity. 75 (a) waa ater a A am an anwd @ 2? atetes fief ae FI fran ifs (@) “mgt ates a cif Ww a a we aga 81" ga Oa aT aren aif (a) aa & sfefafrdt fagia at crac) we ded A fe F aida @ wagi fern faga #1 wal atfa () Explain the following statement : In Okun's law, an output growth rate of 1% above normal output growth rate leads to only a 0.4% reduction in unemployment rate and a 0.4% reduction in the rate of unemployment leads to only a 0.6% increase in employment rate, 2.542 (i) Suppose the Philip's curve is given by :1,— =0.1-2u, where nm! = tl ‘Suppose that inflation in year 1 is zero. In year ¢ the authorities decide to keep the unemployment rate at 4% forever. Compute the rate of inflation for year thr t+ itt 2. 3 P.T.O.