Macroeconomics UE Past Papers Questions.

Use the  IS-LM model to explain how changes in public (government) spending, a tax cut, and an increase in money supply influence output in a given economy.

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Lowering the interest rate is among the most common macroeconomic policy measures which are used to avoid a recession

1. Explain how a low interest rate can simulate output growth
2. Describe briefly the undesirable effects that are likey to be associated with a low interest rate.

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Describe briefly how changes in income , tax rate,government(public) spending and the marginal propensity to consume influence saving and hence investment in a closed economy.

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Briefly discuss how the saving behavior in an economy can influence the effectiveness of an increase in public spending and/or a price cut in increasing output(GDP).

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Explain why a reasonable increase in money supply is important in sustaining growth in the economy.

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