THE LONDON SCHOOL
OF ECONOMICS AND
POLITICAL SCIENCE I
Summer 2015 examination
2014/2015 syllabus only not for resit candidates
Instructions to candidates
This paper contains three sections. Candidates should answer ALL questions from Se
Solution to Macro Quiz 10 (lecture 10)
In the Euro periphery area
a. High interest rates in the 1990s were due to the risk of bank insolvencies
b. High interest rates in the 1990s were due to the risk of currency devaluation
High interest rates afte
Solution to Essay Question 1 (Lecture 1)
According to World Bank estimates, in 2014 the nominal GDP of the US and China were $17.42
Trillion and $10.36 Trillion, respectively. In the same year, the PPP GDP of the US and China were
$17.42 Trillion and $18.
Solution to Macro Essay 10 (lecture 10)
a) Some think that the sovereign-debt crisis in the periphery of the Euro had its roots in the
2008-2009 financial crisis. Provide arguments in favour of this view, and counterarguments, if you can think of any. (No
Solution to Macro Essay 9 (lecture 9)
Explain the meaning of the expression originate and distribute and explain how this
practice may have contributed to the financial crisis.
Originate and distribute means that lenders generate loans with the intenti
Solution to Macro Essay 6 (lecture 6)
Faced with a negative demand shock, the central bank needs to strike a balance between doing
too much and doing too little. Explain.
SOLUTION: The central bank faces a trade-off in terms of inflation and output.