Question One

Explain the THREE instruments of monetary policy. With the use of appropriate economic models, explain and illustrate how the Central Bank can achieve an increase in real GDP with the use of three of the monetary policy instruments you discussed.

Question Two[10 marks]

Using loanable funds theory, discuss how changes in consumer savings, business investment, and in the money supply by the Federal Reserve System can influence the level of interest rate

Question Three [10 marks]

a)What are the three principal domestic macroeconomic policy goals? Explain each. What is the policy mix? Explain. How can policy makers use their policy instruments to achieve their domestic policy goals? In your answer, explain how macro-policy can be used to combat the problems of recession, overheating and stagflation[ 5 marls]

b)Discuss how globalization has led to variations in the standard of living and differences in the level of development between nations.[5 marks]