Answer all the questions below

Suppose the Federal Reserve Bank decides to raise interest rates in order to reduce inflation in

the US. Explain how this is likely to affect aggregate demand and hence national income in the

UK.

Country A has a current account deficit and so has decided to implement a contractionary fiscal

policy. Discuss the possible conflict that will arise between the national interest of Country A and

the international interest.

22.3 The possible arguments against the single currency within the EMU include:

I The eurozone isn't an optimal currency area.

II The fiscal rules of the Stability and Growth Pact have not been adequately enforced.

III It removes the ability of countries to depreciate their currencies in the event of recession.

A I and II only

B I and III only

C II and III only

D I, II and III

22.4 Which of the following statements is FALSE?

A The international harmonisation of economic policies is more difficult if countries

experience divergent economic conditions.

B The eurozone is an example of a currency union.

C The impact of asymmetric shocks will be greater the lower is factor mobility between

member countries.

D The euro eliminates uncertainty due to exchange rate fluctuations.

(i) Define optimal currency area.

(ii) Explain why it can be argued that the eurozone isn't an optimal currency

area.

Explain the arguments both in favour and against European economic and monetary union.

If MI) = lft} I) for D 5 x C." 100, calculate a. lapwo 13- 159m 9- 3some '31- 3m e. Var[T(40=50)] f. Varmmn g. Cov[T(4D:50), am\" h. The correlation between mass} and T(4o:5o). Evaluate d8\". :13: Show that the probability of two lives (30) and (40) dying in the same year can be expressed as 1 + 330% _ Pena + 931m) _ Pail] 'l' 3:50:41} + p30:d(1 + 53m)- Show that the probability of two lives {30) and (4D) dying at the same age last birthdayr can be expressed as lapsell + Emma) _ 2 115030 (1 + 34031) + P40 111%) {1 + 341:41)\" Assume that the forces of mortality that apply to individuals I and I], re- spectively, are p.1(x) = log % for all x and unt) = (10 :t)'1 for 0 E x