Old Q.4 (a) What is the role of the financial system?

Name and describe two markets that are part of the financial system in the US economy. 7 Q.4 (b) Write a short note on the Crowding out effect. 7 Q. 5 (a) Define money. Discuss the role of money in a modern capitalist economy. 7 Q. 5 (b) Write a note on the Volcker Disinflation. 7 Q. 5 (a) Write your comments on Should fiscal policymakers reduce the govt. debt. 7 Q.5 (b) Define consumers surplus and producer surplus. Write a note on its utility for business decisions. 7

New Q.4 (a) Below are some data for an X economy, which produces only two goods A & B. Year Price of A Qty. of A Price of B Qty. B 2008 $1 150 $2 100 2009 $2 200 $3 150 2010 $3 250 $4 200 Calculate Nominal GDP, Real GDP & GDP Deflator for each year, using 2008 as a base year (b) What is the Theory of liquidity preference? How does it help explain the downward slop of the aggregate demand curve? Q.4 (a) Describe the four Determinants of Productivity. 07 (b) Define Nominal Exchange Rate & Real Exchange Rate and explain how they are related. Q.5 (a) What is the Prisoners Dilemma & What does it have to do with Oligopoly? Give Example other than Oligopoly to show how the Prisoners Dilemma helps to explain behavior. (b) What are the Determinants of Supply? Q.5 (a) Write a note on Volckers Disinflation. 07 (b) What is Production Functions? How does long run production function differ from a short run production function?