Briefing Notes on Macroeconomic Concepts for First-year University Students

CITATIONS AND REFERENCES: You should cite sources though this is not to be considered as coursework, and as such it is not expected for you to include lengthy quotes, and no formal reference list is required (in-text citations are required though).

PLAGIARISM: All submissions will be put through Turnitin and tested for plagiarism. Therefore, please do not copy contents from web and/or any other source.

• WORD COUNT/LIMIT: Please see the question for the word count/limit.
• DIAGRAMS, FIGURES or TABLES - If you are including any diagrams, figures or tables in your answer, these MUST NOT be copied from the internet or any other source. Please include your own figures/diagrams, i.e. drawn using a suitable editor or drawn and inserted by you. Figures should be cited in the main text and appropriately explained.
• You MUST NOT contact the module leader, teaching team or ABS Programme Office (Exams & Assessment or Student Support) through email during the 24-hr period, when the exam is taking place, with any queries related to the exam questions to ensure fairness to all students. Please answer the questions to the best of your abilities and your own understanding.

Assume that you are an economist appointed by a publisher who is compiling a book containing briefing notes on a series of economic concepts. The book is aimed at first-year university students of macroeconomics who may not have studied economics before. The briefing notes are designed to be a way of introducing these students to important macroeconomic concepts, drawing out their economic significance and relevance in analysing and explaining real-world aspects of the macroeconomy.

The publishers have asked you to produce TWO briefing notes from ANY two of the following six concepts. They have asked that the briefing notes make appropriate links to the real world so that students are able to appreciate the everyday relevance of the concepts. Finally, they have requested that each briefing note should be no longer than 500 words.

• The distinction between nominal and real figures
• Cumulative causation
• Liquidity trap
• The natural rate hypothesis
• Consumption smoothing
• Steady state

B1. Apply the AD/AS model to discuss whether or not discretionary increases in government purchases influence levels of economic activity in the long run.

B2. Apply the IS/MP framework to discuss the factors that might affect the short-run impact on real national income of a decrease in autonomous spending.

B3. Apply the Phillips curve framework to discuss the implications of the accelerationist hypothesis for the rate of inflation from attempts by government to keep unemployment consistently below its natural rate.

B4. Whilst the financial system enables consumption smoothing, some economists believe it can also propagate economic shocks, amplify business cycles or perhaps even be an important source of economic volatility. Discuss whether or not you agree with them.

B5. With reference to theories of growth, discuss the possible policy measures a government might implement to raise its country’s long-run rate of economic growth.