Question #1 Discuss the view that unemployment is a more serious economic problem that inflation. Why might Keynesian and Monetarist economists disagree on questions like this?

Question #2 Distinguish between ‘supply side’ policies and ‘demand management’ policies. Why do many governments now appear to wish to focus increasingly on the supply side?

Question #3 Using suitable examples, explain the difference between the multiplier and the accelerator. Evaluate the proposition that the most effective way to reduce unemployment is through the use of demand-side policies.

Question #4 What are the causes of inflation. Evaluate the possible effects of a persistently high inflation rate on a country’s current account balance and its exchange rate.

Question #5 ‘The effect of a decrease in aggregate demand on output and the price level depends on the shape of the aggregate supply curve’. Explain this statement. Evaluate the likely effects of a falling rate of inflation on the performance of an economy.

Question #6 Define ‘crowding out’. What is its importance in macroeconomic policy modelling?