Intermediate Macroeconomics (ECST3201)
DIPET 1 in Economics - ECNT
Semester: Second Semester
Level: 300
Year: 2011
INSTRUCTIONS: ANSWER
ALL QUESTIONS
PUT
ANSWERS
TO 2 DECIMAL PLACES
Question One
Using the following information:
C=100+0.25Y
D
I = 75 + 0,25Y -- 500i; G = 125;. T
= l60
Money demand is given by: 2Y - 4000i
Money supply is given by: 800frs
a) Derive the IS relation
b) Derive the LM euwe
c) Solve for the equilibrium real output and interest rate.
u) Suppose that the money supply decreases to 500. Solve for Y, i, C & I; and describe in words the
effects of an expansionary monetary policy
e) Beginning from the original situation, suppose that government spending decreases to 80frs.
Summarize the effects of this policy on Y, I, C, & I
Question Two
The concepts of inflationary and deflationary gaps lay emphasis on the idea that equilibrium income can
deviate from full employment level of income. Discuss these concepts with its policy implications.
Question Three
Suggest a policy mix to achieve the following objectives in Cameroon
a) Decrease Y while keeping i constant
b) Increase the physical deficit while keeping Y constant. What happens to:
i) Interest rate ii) Investment
UNIVERSITY OF BAMENDA
HIGHER TEACHERS TRAINING COLLEGE
REST
I
T EXAMINATIONS
-
1
Department;
ECONOMICS
Examiner; Dr, Dobdingha Cletus F.
Academic year: 2010/2011
Course code: Eco 202
Date: September 2011
Course title: Intermediate Macroeconomics
Time allowed: 2 HOURS Credit value:
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