Explain the theoretical foundations of keynesian economics

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Reference no: EM133055291

Question 1 The Global Financial crisis of 2007/8 resulted in a resurgence of interest inKeynesian economics among many economists and policy makers in many parts of the world. This included discussions and implementation of economic policies based on the recommendations made by J.M. Keynes in response to the Great Depression of the 1930s.

a) Explain the theoretical foundations of Keynesian economics.
b) Do you support this resurgence? Justify your answer.

Question 2

a) According to Keynes the economy can get trapped in a situation where monetary policy is totally ineffective, i.e. the economy is in a liquidity trap. Explain using graphs

b) Compare and contrast the Keynesian and monetarist views with respect to the demand for money. What is their key difference?

Question 3

Keynesianism and monetarism are undoubtedly two of the most influential schools of thought within economic theory. Provide a comprehensive overview of both approaches by identifying their key differences.

Question 4

a) Using appropriate diagrams, compare cost-push and demand-pull inflation. And the key differences between them.

b) It is sometimes said that while cost-push factors can lead to higher prices and therefore, an initial round of inflation, inflation can only be sustained bydemand-pull factors. Explain this point of view.

Question 5

Inflation in the UK, Europe and in the United States has remained relatively low in recent years - despite so much new money being pumped into these economies resulting from Quantitative Easing. For whatever reason, money supply growth in most countries no longer tracks the consumer price index in any meaningful way. Some economists have suggested that this is evidence that monetarism is dead.

a) Explain the meaning of Quantitative Easing and monetarism?
b) Do you agree that monetarism is dead? Why?

Question 6

a) Explain and show using a graph how the long run outcome in monopolistic competition differs from that in a monopoly
b) Compare and contrast perfect competition and monopoly in terms ofopportunity for long term economic profits, nature of competition and socialoutcomes. Use diagrams and give appropriate examples.

Question 7
Write short notes on EACH of the following concepts:
a) Bank Credit Multiplier
b) J-curve effect
c) Crowding out.
d) Deflationary gap
e) Marshall-Lerner Condition

Question 8

The circular flow of income forms the basis for all models of the macro-economy,andunderstanding the circular flow process is key to explaining the determination of national income, output and expenditure over time. Fully explain and illustrate the circular flow of income model as well as highlight the causes and consequences of disequilibrium?

Question 9

a) Discuss how Porter's Five Forces Model can help explain the relationship between market structure and the strategic behaviour of firms

b) Elaborate on any limitations that may be associated with this framework

Question 10

a) Define price elasticity of demand, using appropriate formula.

b) Discuss the importance of price elasticity of demand of a good service in affecting the revenue of a business. Use diagrams to illustrate.

Question 11

a) All unemployment is voluntary'. Discuss the economic basis for this assertion.

b) An economy has high nationwide unemployment. Discuss and critically appraise the government's policy options.

Reference no: EM133055291

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