1. 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?

2. 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?

3. 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.

4. 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.

5. 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.

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