C2(A). Discuss the following statement: "increasing the savings rate in the economy always increases welfare as it leads to an increase in output per capita". (14 marks)

C2(B). For each question, identify the statement as True or False. You will receive 1 mark for correctly identifying the statement as True or False (please circle the correct answer) and 3 marks for an explanation of your answer. You may use verbal or diagrammatic explanation as appropriate. Please note explanations should not exceed 5 lines.

C2(bi). Profit maximisation is one of the objectives of the central bank in the three-equation model. (4 marks).

C2(bii). A government with an overly ambitious output target can credibly commit to targeting equilibrium output, and solve inflation bias problem (4 marks).

C2(biii) Assess the following statements whether are true or false? Justify your answer making reference to the objectives of the policy maker.

C2(biii) A. Economic policy should aim to limit firm-level volatility (4 marks)

B. Economic policy should aim to limit macro-level volatility (4 marks)