Economics for Investment Analysis and Business

Economics for Investment Analysis and Business

Section A – Answer ONE question ONLY.

Question 1

Explain the following concepts: [34 marks]

Factors of production (explain both the notion and each factor briefly);

Diminishing marginal product of capital;

Total Factor Productivity (TFP).

Explain what is ‘growth accounting’ and, using the results from this methodology, outline the main drivers of long-run growth. [66 marks]

Question 2

What messages can growth theory and growth accounting give us in terms of economic growth in Africa over recent decades? In answering, outline the methodology by which these results are obtained. [100 marks]

Question 3

Two views of business cycles are provided by the ‘Real Business Cycles’ and the ‘Keynesian’ schools of macroeconomic thought. Analyse the key tenets of each of these schools of thought and outline their policy implications. [100 marks]

Question 4

Outline the costs of taxation. [34 marks]

Outline the key developments in terms of public spending in advanced economies over the 20th century and explain them in terms of the provision of ‘public goods’ and the welfare state. [66 marks]

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Section B – Answer ONE question ONLY.

All questions carry 100 marks.

1.  Consider the quantitative easing operated by the Bank of England during the COVID-19 pandemic and critically analyse its main consequences on financial markets.

2.  Provide a detailed economic analysis of the consequences of asymmetric information between lenders and borrowers and its impact on financial markets.

3.  Can Central Banks fully control the money supply? Explain and discuss.

4.  Can we predict exchange rates? Explain and discuss.

End of examination paper