Macroeconomic Principles II
Coursework assignment
1. Within the context described in Chapter 5 of the textbook (Blanchard, Macroeconomics, 2017, International Edition), suppose that the economy is in recession (and as a result output is too low). Explain how both fiscal and monetary policies can be used to restore the equilibrium (Hint: see the discussion in page 119 and use a diagram in your reply as well).
2. Based on your previous answer, find, collect, present and analyse data after 2008 from a European country that has used fiscal and monetary policy (or a mix of the two) to fight recession. Focusing on GDP, unemployment and inflation, explain the extent to which macroeconomic policies helped smooth the recession (Hint: see the discussion in pages 120-122 from the textbook).
3. Briefly describe the role of the Credit Rating Agencies (CRAs) for determining the risk premium (see section 6.2 of the textbook). Discuss their role during the euro zone crisis and the increase in risk premium during this period (Hint: see the discussion in pages 136-137 from the textbook).
Deadline for submission: Wednesday 20th December 2017 at 12noon.
GUIDELINES:
2. Format
· Word limit: 1000 words (note this is a maximum not a minimum and you should favour quality over quantity)
· Standard font is Times New Roman, 12pt
· Double space
3. Structure
Make sure your essay has the following elements:
· 1 Paragraph (6-8 lines) of introduction / summary
· 1 Paragraph (6-8 lines) of conclusion
· The main body text (which can/should be divided into smaller sections)
You can insert the diagrams, tables, etc. either in the text or at the end of the text. Make sure, however, to clearly number and refer to the appropriate diagram/table (Eg. “As figure 1 illustrates…” or “As Table 2 shows…”)
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Make sure references to data and other sources are given (articles, website links for data) throughout the text!