1. Contrast the effectiveness of fiscal and monetary policy in influencing the level of aggregate output in an open economy with flexible exchange rates.

2. Discuss the nature of expectations in Keynes' Macroeconomic theory and the role played by them in his analysis of economic fluctuations.

3. What is meant by the "Superneutrality" of money Prove the Superneutrality of money in a Macroeconomic model in which money enters the utility function of consumers in the economy.

4. Use an efficiency wage model to explain: The persistence of unemployment in economies;(b) The relatively greater response of employment rather than real wages to cyclical changes in economic activity.

Answer any five questions from this section.

5. Explain how the IS curve is derived in the IS LM model of a closed economy.

6. Explain briefly Kydland and Prescott's argument as to why policy rules must be time-consistent. What are the possible ways by which policy rules may be made credible?

7. What are the possible advantages of a Macroeconomic model with Microfoundations What might be its potential drawbacks

8. Discuss what is meant by "Nairu".

9. What are the hypotheses of absolute and conditional convergence? Explain how one might carry out a test of the hypothesis of absolute advantage for a set of economies.

10. In the solow model of economic growth derive the condition distinguishing the steady state growth 'path with the maximum amount of consumption per unit of effective labour.

11. Explain how the permanent income hypothesis about consumption differs from the life cycle hypothesis.

12. Discuss Goodwin's model of a business cycle based on distributive conflict between capitalists and workers.