Question One.

a)Discuss the effectiveness of fiscal and monetary policy in the economy”s short run equilibrium.

b)Derive the aggregate demand curve for a small open economy.

Question Two.

a)Discuss the four theories in favor of an upward sloping aggregate supply curve.

b)What is the effect of an anticipated expansionary monetary policy in the AD-AS model?

Question Three.

a)Derive the dynamic aggregate demand curve?

b)Discuss the long run Philips curve and how does it filter from the short run Philips”s curve?



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