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  • Sp21 ECN 202 Final Assignment

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    Maher Neger Aney
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    This document provides the instructions and questions for the final assignment in an economics course. It details that students must: 1) Complete the assignment answering all five questions on paper by the deadline. 2) Upload a scanned copy, not email it, with their name, ID, and answers handwritten. No late submissions or electronic copies are accepted. 3) Draw and label any graphs clearly and show all calculation steps for questions requiring it. The five assignment questions cover topics like: the impact of exchange rates on prices; using fiscal policy to stabilize an economy in recession; how supply and demand are affected by changes in oil prices and potential government policies; impacts on foreign direct and portfolio investment from different

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    This document provides the instructions and questions for the final assignment in an economics course. It details that students must: 1) Complete the assignment answering all five questions on paper by the deadline. 2) Upload a scanned copy, not email it, with their name, ID, and answers handwritten. No late submissions or electronic copies are accepted. 3) Draw and label any graphs clearly and show all calculation steps for questions requiring it. The five assignment questions cover topics like: the impact of exchange rates on prices; using fiscal policy to stabilize an economy in recession; how supply and demand are affected by changes in oil prices and potential government policies; impacts on foreign direct and portfolio investment from different

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Download as pdf or txt
    147 views2 pages

    Sp21 ECN 202 Final Assignment

    Uploaded by

    Maher Neger Aney
    This document provides the instructions and questions for the final assignment in an economics course. It details that students must: 1) Complete the assignment answering all five questions on paper by the deadline. 2) Upload a scanned copy, not email it, with their name, ID, and answers handwritten. No late submissions or electronic copies are accepted. 3) Draw and label any graphs clearly and show all calculation steps for questions requiring it. The five assignment questions cover topics like: the impact of exchange rates on prices; using fiscal policy to stabilize an economy in recession; how supply and demand are affected by changes in oil prices and potential government policies; impacts on foreign direct and portfolio investment from different

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    Spring 2021

    ECN 202
    Principles of Macroeconomics
    Final Assignment

    Deadline: 5 May, Wednesday 2021


    Time: 6:00 pm

    NO LATE SUBMISSION WILL BE ACCEPTED

    Instructions:
    1. Complete the assignment on A4 size paper
    2. Write your name and ID on top of each page
    3. Scan the assignment and upload it in Google Classroom. DO NOT email me the
    assignment
    4. The entire assignment must be handwritten.
    5. Draw graphs and label them clearly.
    6. Show all steps of calculation for necessary questions.
    7. Please do not complete the assignment on MS Word.

    Answer ALL FIVE questions

    1. a. Explain how nominal exchange rate affects real exchange rate.


    b. Suppose that a chocolate bar costs 20 euros in France and 30 Singaporean dollars in
    Singapore. If the exchange rate is 1.20 euros per Singaporean dollars, what is the real exchange
    rate?

    2. Suppose the economy is in recession. Policymakers estimate that aggregate demand is


    $100 billion short of the amount necessary to generate the long run natural rate of output.
    That is, if aggregate demand were shifted to the right by $100 billion, the economy would be in
    long run equilibrium.
    a. Explain the impact on the economy if the government chooses to use fiscal policy to stabilize
    the economy and the marginal propensity to consume (MPC) is given as 0.75 with no crowding
    out.
    b. If there is a crowding out effect and investment is very sensitive to changes in the interest rate,
    should the government increase spending more or less than this amount?
    3. Suppose, OPEC decides to cut down oil production, causing oil price to go up.
    a. Explain with the help of an aggregate demand and aggregate supply diagram how price level
    and potential level of output changes if the government does not take any policy initiatives.
    b. Now, suppose the government takes policy actions to bring the economy back to its potential
    level of output. Recommend what possible policies the government can take and explain with the
    help of a diagram how this will affect your answer in part a.

    4. Explain how will the following transactions affect Bangladeshi NCO? Does this transaction
    affect direct investment or portfolio investment? Explain.
    i. Pran Foods Ltd. buys stock in Amul India Private Ltd.
    ii. Walton buys parts from a Japanese manufacturer to use in the production of its refrigerators.
    iii. An US firm expands its outlets in Dhaka.
    iv. A Korean mutual fund buys shares of stock in Beximco.

    5. Suppose that the central bank sells government bonds. Use a graph of the money market to
    show what this does to the value of money and price level.

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