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MEC

MASTER OF ARTS

(ECONOMICS)

ASSIGNMENTS 2014-15First Year Courses

(For July 2014 and January 2015 Sessions)

School of Social Sciences

Indira Gandhi National Open University

Maidan Garhi, New Delhi-110 068

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Master of Arts (Economics)Assignments

(2014-15)

Dear Student,

As explained in the programme guide for MEC, assignments carry 30 per cent weightage in

course and it is mandatory that you have to secure at least 40 per cent marks in assignments t

complete a course successfully. Note that you have to submit the assignments before appearin

in Term End Examination of a course.

Before attempting the assignments please read the instructions provided in the programm

guide sent to you separately. There are five compulsory courses in the first year. In eac

course there is a Tutor Marked Assignment (TMA). You have to prepare and submit th

assignments separately for each course. Make sure that you submit the assignments well i

time for those courses in which you plan to appear in the Term End Examination.

Submission

For July 2013 session, you need to submit the assignments by March 31, 2015, and fo

January 2014 session by September 30, 2015 for being eligible to appear in the term-en

examination. Assignments should be submitted to the Coordinator of your Study CentreObtain a receipt from the Study Centre towards submission.

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MEC-001: MICRO ECONOMIC THEORY

(Assignment)Course Code: MEC-00

Asst. Code: MEC-001/TMA/2014-1

Total Marks: 10

Section A

Answerall thequestions from this section. 220=40

1. An economy comprises two consumers, 1 and 2, with two consumption goods bi-cycles (b) an

wheat. Both consumers have the same utility function

b = Both firms are owned by consumer 1, and consumer 2 owns 200 units of labour.

(a) Find the production possibility frontier for this economy.

(b) Find the competitive equilibrium.

(c) Find competitive equilibrium if every consumer owns 100 units of labour and owns one

firm.

(d) Find the Pareto efficient allocations for this economy.

2. Assume that there are four firms supplying a homogenous product. They have identical co

functions given by C (Q) = 40 Q. If the demand curve for the industry is given by = 100 Q

find the equilibrium industry output if the producers are Cournot competitors. What would b

the resultant market price? What are the profits of each firm?

Section B

Answerallthe questions from this section. 512=60

(a) Distinguish between pure strategy Nash equilibrium and mixed strategy equilibrium. When

would you use mixed strategy equilibrium?(b) Find all the Nash equilibrium of the following game:

Player1

Player 2

Left Right

Up (5,4) (1,3)

Down (4,1) (2,2)

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3.

4. Write short notes onany twoof the following:

(a) Envelope theorem(b) Hidden information

(c) Actuarially Fair Premium

5. A consumers utility function is given as

U(x,y) = In (x+2y- )Where x and y are two goods of consumption.

(a) Find the indirect utility function of the consumer.

(b) Examine if Roys law is satisfied by the consumers demand function for y.(c) Find the expenditure function of the consumer e(p,u)where price of x = 1 and price of

= p.

(d) Find the Hicksian demand function hy (p,u) for commodity y, where the price of x is

and the price of y is p.

6.

Sita expects her future earnings to be worth Rs. 100. If she falls ill, her expected future earnin

will be Rs. 25. There is a belief that she may fall ill with probability ofwhile the probabilit

of remaining in good health is Let her utility function be given as U(y) = suppose that ainsurance company offers to fully insure Sita against loss of earnings caused by illness again

an actuarially fair premium.

(a) Will Sita accept the insurance? Explain.

(b) What is the maximum amount that Sita would pay for the insurance?

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MEC-002: MACROECONOMIC ANALYSISAssignment

Course Code: MEC-00Assignment Code: MEC-002/AST/2014-1

Maximum Marks: 10

Note: Answer all the questions. While questions in Section A carry 20 marks each (to b

answered in about 500 words each) those in Section B carry 12 marks each (to be answered i

about 300 words each). In the case of numerical questions word limits do not apply.

Section A

1. Derive the conditions for steady state in the Solow model. What are its implications? In whrespects is the golden rule different from the steady state?

2. Explain how IS and LM curves are derived. What are the implications of IS and LM curves

What are the factors on which the shape of the IS and LM curves depend?

Section B

3. What does the Phillips curve signify? How do you reconcile the difference in the shape of th

curve in the short run and the long run?

4. Lucas point of view, what are the limitations of the Keynesian model? What improvemendoes he suggest?

5. What is meant by endogenous growth? Explain the main features of endogenous growt

models.

6. An economy with fixed exchange rate cannot maintain an independent monetary policy. D

you agree with the above statement? Substantiate your answer with appropriate diagrams.

7. Write short notes on the following.

a) Rational Expectations

b) Search and Matching Model

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MEC-003: QUANTITATIVE METHODS(Assignment)

Course Code: MEC-00

Asst. Code: MEC-003/TMA/2014-1

Total Marks: 10

Section A

Answer all the questions from this section. 220=40

7.

(a) Write a linear first order differential equation and work out its general solution.

(b) How will you solve the Harrod -Domar formulation of steady growth through differential

equations?

8.

(a) If is the sample mean, prove that the expected value of equals the populationmean ().(b) Describe the process of testing hypothesis about population proportion of a given

attribute.

Section B

Answer all the questions from this section. 512=60

9.

Suppose the technology matrix is

Let the final demand sector be D = Find the level of production of the three goods.

10.From the following data, obtain the two regression equations Y on X and X on Y.

X 2 4 6 8 10Y 5 7 9 8 11

11.

A monopolists demand curve is given by P = 100 2q.

(a) Find his marginal revenue function.

(b) At what price is marginal revenue zero?

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(c) What is the relationship between the slopes of the average and marginal revenue

curves?

12.

What is a Poisson distribution? Find the mean and variance of a Poisson distribution.

13.(a) Solve the following problem graphically:

Min C = 0.6x1 +x2

Sub to 10x1 + 4x2 5x1 + 5x2 2x1 + 6x2 x1 , and x2

(b) Why does the solution occur at a corner point only? Give reasons.

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MEC-004: ECONOMICS OF GROWTH AND

DEVELOPMENTAssignment

Course Code: MEC-00

Asst. Code: MEC-004/AST/2014-1Maximum Marks: 10

Note: Answer all the questions. While questions in Section A carry 20 marks each (to b

answered in about 500 words each) those in Section B carry 12 marks each (to b

answered in about 300 words each). In the case of numerical questions word limits do no

apply.

SECTION- A

1)

Describe the nature of the financial system in a modern economy giving the important type

of constituent institutions, markets and instruments. Explain the concept of flow-of-funds i

the financial markets

2)

Discuss the Markowitz theory of efficient portfolio selection. How does the CAPM theor

build on it?

SECTION-B

3)

Explain the Arbitrage Pricing Theory.

4) Explain the need for, and role of depository systems in secondary markets. Explain thconcept of custodial services.

5) Give a theoretical model of central banking, bringing out the relationship between th

monetary base and monetary aggregates. What are instruments of monetary policy used bcentral banks?

6) Compare the impact of monetary policy under fixed exchange rates with those under flexibl

exchange rates.

7)

Discuss the concept of leverage for a firm. Discuss the important financial and leverage ratio

used. Explain the Merton-Miller theorem.

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MEC-005/105: INDIAN ECONOMIC POLICY

Assignment (TMA)

Course Code: MEC-00

Assignment Code: MEC-005/105/AST/2014-1

Maximum Marks: 10

Note: Answer all the questions. While questions in Section A carry 20 marks each (to b

answered in about 700 words each) those in Section B carry 12 marks each (to be answered i

about 500 words each).

Section-A

1. Distinguish between economic growth and economic development. How is economicdevelopment a better measure of economic welfare?

2. What are the constituents of financial system? Critically evaluate the impact of reform

introduced in the equity and foreign exchange market.

OR

Give an account of major changes that have taken place in Indian economy over the last

six decades. What are the implications of expansion in the services sector for employmen

and poverty?

Section-B

3. More people mean more resources.

Comment on the above statement.

4. Explain the important issues which are crucial for promotion of Indian exports an

hence need to be addressed in Indias trade policy.

5. Explain the role of agricultural policy in raising public investment in agriculture.

6. Which changes would you like to make in trade and industrial policies to ensure rapi

growth of GDP while maintaining adequate macro-economic balance?

7. Do you think that existing institutional structure in India has not led to good governance?

Give reasons in support of your answer.