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By Sanjay Rode

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Questions 1. Write a note on following a) Income and spending. b) Balanced budget theorem. c) What is crowding out and when do you expect it to occur? Is monetary or fiscal policy appropriate in this case? 2. Write short note on full-employment budget surplus. 3. Derive the fiscal and monetary policy effect on the IS-LM framework. 4. Bring out the relative effectiveness of fiscal and monetary policies under different conditions. com 42 Advanced Macroeconomics Introduction to Macroeconomics 5. Explain the following: a) Show the effect of monetary and fiscal policies on the Classical supply curve.

There are three approaches to demand for money developed by the Classical, Cambridge and Keynes. The money is supplied in the economy on regular basis by the reserve bank. The determinants of money and the velocity of circulation of money determine the total volume of money in the economy. 1 Origin of money In traditional society, not the actual money but its proxy was used in all the transactions. There were various forms of money. Such money was commodity, representative or credit money. Such forms of money are explained as follows 1.

The expansionary fiscal policy leads to increase in income with large increase in the interest rate. The downward sloping supply curve is the aggregate demand curve. Please click the advert Is your recruitment website still missing a piece? Bookboon can optimize your current traffic. By offering our free eBooks in your look and feel, we build a qualitative database of potential candidates. 3 Aggregate supply curve Aggregate supply curve is classified into two types. The Keynesian and Classical aggregate supply curves are based on separate assumptions.

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