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Question 1 Use the Market for Loanable Funds, Net Foreign Investment and the Market for Foreign

Currency Exchange diagrams combined, to examine the impact of a removal of import tariff on each market. In your answer make sure that you fully explain the impact in each market and that you comment on the impact on each of the following variables: private savings, public savings, national savings, investment, net foreign investment, exchange rates, net exports


Question 2 Use an AD-AS model to explain the short-run and long-run effects on both prices and output in the Hong Kong economy following the 2019 protests. Note: Long-run aggregate supply (LRAS) curve should be included in the diagram when you explain the long-run effects. You need to think carefully if this protest will cause any shift in LRAS curve.


question 3 Suppose the government increases spending: (a) Illustrate and explain the multiplier effects on aggregate demand.

(b) Use a diagram of the money market, illustrate and explain why it may cause 'crowding out' to occur.

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Question 1 No change in private saving, public saving, national saving,... View the full answer

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