Your answers to this assignment should include references to recently published journal articles or 

books, media news as well as information on the web. Where appropriate you are encouraged to 

challenge relevant economic theories providing your own justified views. 

Answer EITHER 

Question 1: 

(i) Critically examine the effectiveness of various approaches that may be used to reduce 

macroeconomic instability. 

Your answer should identify and show an understanding of the various policies that a country’s 

government and/or central bank may use to achieve generally accepted macroeconomic goals. 

You are also encouraged to suggest your own ideas as to what should be done to more effectively 

attain desired macroeconomic goals. 

In your answer, you should explicitly identify macroeconomic goals that governments generally 

pursue. Are these the most important or do you think governments should aim to achieve other 

goals? 

(You are encouraged to make use of aggregate demand/aggregate supply analysis.) 

[70 marks] 

(ii) Some people (especially economists) argue in favor of international free trade while others 

favor protectionism. Critically examine who gains and who loses from free trade and 

protectionism. Overall do you think that international free trade is a good idea? 

[30 marks] 

 Page 2 of 2

OR 

Question 2: 

(i) Critically analyze the short-term and long-term effects of a large budget deficit and public 

(national) debt. 

In your answer, provide an explanation of what the public debt is and how it can be financed. You 

should also critically evaluate the various measures that are usually recommended for reducing a 

budget deficit and national debt. 

(This question may be answered in light of the recent events and economic situation in countries 

such as Greece, Cyprus, Portugal and Spain.) 

[70 marks] 

(ii) Some people (especially economists) argue in favor of international free trade while others 

favor protectionism. Critically examine who gains and who loses from free trade and 

protectionism. Overall do you think that international free trade is a good idea? 

[30 marks] 

YOU ARE REQUESTED TO WRITE AND SUBMIT A WORD DOCUMENT FILE, WHICH WILL 

INCLUDE YOUR ANSWERS TO THE QUESTIONS. 

Assignment Specifics: 

 This is an INDIVIDUAL piece of work. 

 Your report should be grounded in relevant theory. 

 Reference all sources appropriately, using the Harvard Referencing System. 

 The word limit of your report is 3000 (minimum) and 3500 (maximum) words. 

 Use Times Roman pt 12, with 1½ or double spacing. 

 Pages MUST be numbered. 

 Headings and sub-headings should be clear and visible. 

 The text should flow smoothly, with each section leading naturally and logically to the next.