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ECONOMICS – Daily Answer Writing Challenge, 09 July 2014

ECONOMICS – Daily Answer Writing Challenge, 09 July 2014

1) If workers supply labour on the basis of an expected real wage, how is the aggregate supply of output determined in the economy? Suppose aggregate demand and supply are below the natural rate of employment and output. Would the new classical economist advocate any particular policy of intervention when the economy is in such a situation ? ( 300 words) 

2) What are the main goals of central bank? What are the instruments by which the central bank manages the liquidity in the financial system and how does it use these instruments to achieve its goal? (300 words)
3) In an economy characterized by two consumers two commodities show how general equilibrium of exchange is attained. State your assumption clearly.  (200 words)

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