THE UNIVERSITY OF SHEFFIELD

MASTER OF BUSINESS ADMINISTRATION

Time: 1 hour

MBA LEVEL:
BUSINESS ECONOMICS

Answer ONE of the following THREE questions. All questions are of equal value.
Your answer should draw upon the academic literature where appropriate.

Question 1
Critically analyse and discuss the impact of imposing direct and indirect taxes on the prices of
products / services, on prices and quantities determination. In your response ensure that you
discuss the macro consequences that such action would have.

Question 2
Does the existence of a shadow or ‘black’ economy imply that the price system is not
working? Is its existence consistent with the laws of demand and supply? What are the
implications of such an economy for the economies of South East Europe.

Question 3
Explain briefly how fiscal policy and monetary policy can affect the level of aggregate
demand. Show how a deflationary monetary policy in the Euro zone can help to cause (or to
make worse) fiscal deficits.