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These questions require you to reflect on your learning of various macroeconomic models to analyse plausible impacts of a pandemic shock, government intervention, and investment in health. They ask you to reflect on their temporary, i.e., short-run (SR), and permanent, i.e., long-run (LR), static and dynamic impacts on the macroeconomy.

Use the classical model with and without Keynesian rigidity to answer Q. 1 &2; the classical model and its neoclassical extension by Solow (1956) to answer Q. 3 & 4, and any model of endogenous growth to answer Q.5.

Illustrate your answer to each question with suitable diagrams or with a numerical example. Plan your answer to approximately 100 words and 35 minutes per question.

Q3. Why does the LR dynamic macroeconomic impact of a fiscal policy of increasing the budget depend on the national saving rate in Solow's (1956) model?