Q#2 When a recession occurs, do economists expect it to be a temporary phenomenon? Or is there some

degree of permanence? What is the empirical evidence?

Q#3 What is the business cycle? Graph the real business cycle of Pakistan for the period 1960 to 2019. label the four phases of the cycle. Explain what is happening during each phase of the cycle with: output, employment and inflation. (Data hint: Download data from ministry of finance website)

Q#4 Who determines the nation's money supply? Explain how the money supply could be expanded or reduced in an economy in which all money is in the form of currency.

a)Explain quantity theory of money?

Q#5 Define general equilibrium and show the general equilibrium point in the IS-LM diagram. If the economy isn't in general equilibrium, what determines output and the real interest rate? What economic forces act to bring the economy back to general equilibrium?