SECTION A
ANSWER THE FOLLOWING COMPULSORY QUESTION.
THIS SECTION SHOULD NOT EXCEED 1,000 WORDS IN TOTAL, EXCLUDING
CITATIONS/REFERENCES.
THIS SECTION CARRIES 35% OF THE OVERALL MARKS.
Assume that you are an experienced macroeconomist working for the Government
Economic Service (GES), the largest employer of economists in the United Kingdom.
You have been tasked by your line manager with writing briefing notes on TWO key
macroeconomic concepts for the successor to your role who is joining the GES after
recently completing their undergraduate economics degree. They are particularly
keen that you draw out their real-world macroeconomic significance and policy
relevance.
Your line manager has given you a choice of four concepts from which to prepare
your two briefing notes. Finally, they have requested that each briefing note be no
longer than 500 words, excluding citations/references (1,000 words in TOTAL for
the whole section).
• Cumulative causation
• Hysteresis
• Taylor rule
• Inflation bias
END OF SECTION A
SECTION B
ANSWER TWO (2) OUT OF FOUR (4) QUESTIONS.
EACH ESSAY SHOULD NOT EXCEED 1,000 WORDS, EXCLUDING
CITATIONS/REFERENCES (2,000 WORDS IN TOTAL FOR SECTION B).
THIS SECTION CARRIES 65% OF THE OVERALL MARKS. EACH QUESTION
CARRIES THE SAME WEIGHT.
B1 Discuss the importance of amplifiers like confidence, uncertainty, and credit
conditions in affecting how economic shocks affect the path of a country’s
national output.
B2 Discuss the proposition that activist government policy is necessary following
significant shocks, like the COVID-19 pandemic, to prevent significant
scarring effects damaging the future wellbeing of the economy.
B3 Applying the DAD/DAS framework discuss the possible adjustment path of
an economy following a contraction of aggregate demand, explaining any
assumptions underpinning your analysis.
B4 Discuss critically the proposition that the potential for inflation bias justifies
the delegation of monetary policy to an independent central bank with a
mandate for price stability.
END OF SECTION B
END OF PAPER