Topic: Shocks, Equilibrium output, unemployment, IS curve, XR curve,

Section B (50 Marks)

B (I) Following exit from the EU single market, assuming the UK decides to trade only among the four nations (i.e., without rest of the world). How will the shocks listed in ‘a-e’ below affect the UK’s (i) equilibrium level of output, (ii) unemployment, (iii) the IS curve and (iv) the exchange rate (XR) curve

(a) stock market boom (8 marks)
(b) a fall in the retirement age (8 marks)
(c) a decrease in depreciation rate (8 marks)
(d) a natural disaster that wipes-off stock of capital (8 marks)
(e) an increase in the rate of technological progress (8 marks)

(II) If we relax earlier assumption, and now assume that the UK is a small open economy, demonstrate using the 3-equation model the adjustment to equilibrium of a permanent shock to aggregate demand (10 marks)

Type Of Service: Academic paper writing
Type Of assignment: Team paper
Subject: Economics
Pages/words: 3/600
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Academic Level: Undergraduate
Paper Format: Harvard
Line Spacing: Double
Language style: UK English