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PP5403 Macroeconomic Interventions

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Topic: Macroeconomic Interventions

The objective of this assignment is to apply economic principles to analyze the effectiveness of macroeconomic government intervention in the context of a real world public policy example.

Your essay should address the following five points:

(a) Select a real world example of a fiscal policy intervention (expansionary or contractionary) in a country of your choice. 
(b) Give a detailed description of the policy context. 
(c) Discuss how the policy theoretically affects a) economic output, b) general price level, and c) unemployment rates. Use diagrams to explain your answer. Label your diagrams carefully. 
(d) Using real world data, discuss whether the theoretical predictions are borne out. 
(e) Explain how the policy may theoretically affect monetary policy conducted by the Central Bank. Using real world data, discuss whether the theoretical predictions are borne out. 
(f) Offer at least one and maximum two recommendations to improve the design of the fiscal policy intervention in terms of efficiency and/or equity outcomes. Cite economic theories or evidence from the empirical literature to justify your recommendation/s. 
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