Tutorial#:4

OPTION #4

TOTAL MARKS: 40

1. Define the following:

-Inside lag

-Outside lag

(4marks)

b.Which has the longer lag-monetary or fiscal policy? Which has the longer outside lag? Give reasons for your answer?(4marks)

1. Explain how a person's interpretation of macroeconomic history could affect his view of macroeconomic policies?(4marks)
2. Describe two ways economists try to forecast developments in the economy.(4marks)
3. Using three key points, critically analyze how national debt can affect the economic prosperity of a country.(12marks)
4. Define "time inconsistency" of economic policy?(2marks)b) Examine why policy makers might be tempted to renege on an announcement they made earlier?(4marks)In this situation, what is the advantage of a policy rule?(2marks)

6. Do you believe the traditional or the Ricardian view of government debt? Justify your response?(4marks)