problem 1:

Critically determine the costs of inflation. Which of these items is likely to have encouraged many governments in their adoption of inflation as public enemy number one?

problem 2:

(a) Make a distinction between static and dynamic gains from trade.

(b) describe clearly, with the aid of diagrams, the welfare effects of an import tariff assuming

(i) The economy is small

(ii) The economy is large

problem 3:

(a) Critically determine the major types of unemployment

(b) ‘There is no relationship between inflation and unemployment either in the short run or in the long run’ Discuss

problem 4:

Consider a closed economy with no government sector in which consumption (C) is related to income (Y) by the equation:

C = A + bY

(a) What is marginal propensity to consume?

(b) How is level of savings related to income in the economy?

(c)  At what is the level of national income savings would be zero?

(d) What would be the equilibrium level of income?

(e) Investment in this model is assumed to be autonomous. If investment was supposed to be induced, what main factor will determine its level?

(f) Clearly draw and describe the circular flow when the government sector is introduced in model.

problem 5:

prepare notes on ALL of the following:

(a) Functions of the Bank of Mauritius

(b) International Competitiveness

(c) Budget Deficit and Fiscal Stance