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This assignment is based on the following requirement –
Consider the article titled “Public finances hit record deficit as recession looms”. Answer the following question.
1. Apply the Keynesian Cross model to analyse how falling house prices and tighter consumer credit conditions in the UK may cause the UK macro-economy to go into recession.
Consider the articles titled “Bank of England’s time out for Quantitative Easing plan” and “Easy Does it: No further QE”
Answer the following Question
2. Apply appropriate theoretical frameworks to analyse the short run and long run economic impact of the Bank of England’s decision to end the Bank’s 200bn quantitative easing (QE) programme designed to stimulate the UK economy. Carefully specify the starting position of your analysis to evaluate the possible outcomes.
Consider the article titled “interest rate remains Unchanged at 0.5%”. Answer the following questions.
3. Apply the Keynesian cross model to analyse the impact on the UK macro economy of the Bank of England’s decision to keep interest rates at 0.5%. Then evaluate the likelihood that such a policy can spur economic growth in the UK economy?