“Wage cuts in an economy with unemployment will be counterproductive”. Discuss.
1.Essay (50% of final mark), 2000words, need completed essay structure, but more focus on discussion! Answer one question only 1) “Wage cuts in an economy with unemployment will be counterproductive”. Discuss. 2) “In the long run monetary policy cannot influence employment or other real variables, only inflation’. Discuss. 3) “Government intervention is essential to maintain full employment”. Discuss. 4) Why has inequality risen over the past decades? Discuss. 5) Pick a southern European country and describe its unemployment experience in the past twenty years with reference to the NAIRU theory. 6) What is the source of financial instability? Discuss. 7) Rodrik argues that in the modern globalised economy “democracy, national sovereignty and global economic integration are mutually incompatible”. Discuss. 8) “Free trade is unable to generate sustained industrial growth in developing countries”. Discuss. 9) Keynes said “above all, let finance be national”. Discuss.Week 4&5 Task list (50%) of final mark, 600-700 words per question, write straight to the part of discussion! Answer three of the following exercises (using 600-700 words per question) 1) ‘Competitive markets lead to socially optimal outcomes’. Explain the this statement and the relevant assumptions. 2) Explain the concept of ‘natural rate of interest’ and its relevance of economic policy. 3) Explain the fiscal expenditure multiplier and its relevant for economic policy making. 4) Explain the Keynesian notion of animal spirits and how it contrasts with neoclassical behavioural assumptions. 5) Contrast neoclassical and Keynesian theories of money, finance and the interest rate. 6) Explain the NAIRU theory, its relation to the basic neoclassical and Keynesian analyses of the labour market and its relevance for economic policy. 7) Explain endogeneous money creation and its implications for economic policy. 8) Explain the ‘impossible trinity’ in international economics (also known as Mundell-Fleming trilemma) and its implications for economic policy. 9) Explain the notion of ‘wage-led growth’ and its implications for economic policy. 10) Explain the concept of comparative advantage and its implications for trade policy.
