Coursework on Economics Module

Part I

his coursework is worth 70 percent of your overall mark. It consists of two parts. . Diagrams and equations may be composed by hand (neatly) and inserted into the document as images. Diagrams may well enhance your answers in some cases, but they need to be fully integrated into any explanations. Otherwise no credit will be given for their inclusion. This assignment must be completed without any consultation with or help from others. Any evidence of collusion on the part of two or more students will lead to an academic misconduct investigation. Part I : Answer four and only four of the five questions below. Each question is based on a topic covered in the module and can be answered by consulting the learning resources for that topic. Resources consist of lecture slides + recordings, the textbook and any additional readings posted on Moodle by the lecturers. It is your responsibility to identify the topic and make use of the relevant resource(s) in composing your answer. While you may consult resources other than those provided via Moodle, verifying the credibility and relevance of such resources is your own responsibility, along with the risk that they might lead you to provide incorrect answers. Your answers will be assessed on the following criteria Knowledge and Understanding: Does the answer show that you have understood the question in the proper context of the topic to which it relates? Does your answer reflect a good grasp of the material covered by the learning resources?Analysis and Application: If the question is related to one of the models taught in the module, has the model been applied correctly? If a diagram has been used in the answer, has the diagram been drawn and labelled correctly? Communication and Structure: Is the answer clearly written? Does it flow smoothly and logically? If a diagram or equation is used in the answer, are they properly integrated into the text with an accompanying explanation?   Can an increase in the interest rate affect the labour supply curve? How and why? Did the Malthusian model do a good job of predicting the evolution of the British economy in the time since it was first published? Explain the key assumptions that underpin the Malthusian model. What are the key differences between the Malthusian model and the Solow growth model? When was the Solow growth model developed and what was significant about that period? What did it predict that was significant at the time? When was the endogenous growth model developed? What did researchers observe in the world that led to its development? Explain the relationship between the amount of investment in an economy and the rate of interest. How might both the number and type of investments the private sector undertakes change when the interest rate changes and why? Is the ability to trade with other countries strictlywelfare improving? Explain. What if any are the practical real-world implications of your answer? Part IIAnswer one and only one of the two questions below.  The word count will only apply to sub-questions that ask for explanations or discussion. The same criteria as used in Part I will be applied to marking such questions. On mathematical sub-questions, show all the steps in your derivation or calculations in a systematic and orderly way.  Also, round numerical values to two digits if needed. This is a question about the small open economy (SOE) model with production and investment. Show how according to the theory, the economy reacts to a negative shock to total factor productivity. Explain. Could the behaviour of the current account following a negative but temporary TFP shock as described in our theory of the SOE be a justifiable reason to prefer the economy to remain closed and not trade with the rest of the world? Explain. Suppose the negative TFP shock is only expected to occur in the future. What will happen to output, interest rates, investment and the current account? Does the response of the current account we observe in the data match the predictions of the SOE model? Explain. This is a question about the Real Business Cycle model.  Model the impact of two potential sources of business cycle fluctuations, persistent shocks to (i) total factor productivity and (ii) shocks to government consumptionWhich of these two shocks is considered a more likely source for the cyclicality we observe in output, interest rates, wages, investment, employment and consumption and the average productivity of labour? Explain.  Is there a reason why economists usually assume shocks in the RBC model are persistent rather than temporary? Explain.