Word Count : 3000 words

Learning Outcomes

  1. Critically appraise the IS-LM and AD-AS models in macroeconomic policy formulation.
  2. Scrutinise core elements of the financial system and the influence of specific financial assets in this system.
  3. Identify and evaluate the goals of monetary policy and debate the relative merits of different monetary policies.
  4. Critically discuss and make informed judgements on a range of current monetary issues.
  5. Assessment Information

This is a group assignment. This assignment requires you to prepare a written report on ONE topic from the following:

Topic 1

Financial system /Financial intermediation

The essay should aim to cover some of the following areas:

  • a. Explain the (main) functions of the financial system. Illustrate your points by giving examples of different types of financial institutions and their role in bringing deficit and surplus units together.
  • b. Discuss how the financial system affects the level, composition and growth of aggregate demand in the economy. Illustrate your arguments by using a financial system of your choice.
  • c. Show how financial institutions and financial markets both channel funds from savers to borrowers but that they do so in different way.

 

Topic 2

Money (money supply and demand for money, tools of monetary policy)

The essay should aim to cover some of the following areas:

  • a. Discuss the proposition that the monetary authorities can control either short-term interest rates or the quantity of bank reserves, but not both.
  • b. You might read in the newspaper that the central bank, for instance, the Bank of England has increased the discount rate recently. Does this signal that the central bank is moving to a more expansionary or tightened monetary policy? Explain your points.
  • c. Discuss the advantages and disadvantages of quantitative easing as an alternative to conventional monetary policy when short-term interest rates are at the zero lower-bound.

 

Topic 3

Aggregate Demand and Supply Analysis

The essay should aim to cover some of the following areas:

  • a. Discuss what typically happens to consumption, investment, and the unemployment rate when real GDP declines during a recession.
  • b. Why are the central banks so concerned about inflation expectations?
  • c. Under what circumstances might it be possible to reduce inflation without causing a recession?
  • d. Illustrate your arguments by using a financial system of your choice.

 

Topic 4

The Central Bank

The essay should aim to cover some of the following areas:

  • a. Critically evaluate the argument for and against the independence of the central bank of your choice.
  • b. What is the lender-of-last-resort function? Why is it controversial?
  • c. Discuss the proposition that the monetary authorities can control either short-term interest rates or the quantity of bank reserves, but not both.
  • d. Address the main functions and objectives of the central bank of your choice. Discuss and evaluate the key actions taken by the Bank of England, or the European Central Bank or the Federal Reserve since the spring of 2020.
  • Guidance for submission of Group written report

 All group members must upload their final version of group written report, individually on

Aula, i.e. if there are 2 students in Group 1, then both students MUST upload their group written report on Aula.

 Final file for Group written report should be named as “7044EFA_2223SEPJAN_CW_Group1” for group 1, for example.

Criteria for Assessment

Final mark will be based 75% on group written work and 25% on individual contribution.

The written report requires you to write on ONE topic. Essay on each topic will be assessed on the following:

 Introduction and a definition/ explanation/ development history of the key term

(15 marks)

 Examples/diagrams should be used to illustrate the concept (where applicable).

(10 marks)

 Analysis. An explanation of how the topic relates to the money and banking context.

Review, critically, the literature available using, as a basis, the references provided.

(20 marks)

 Argument and substantiation/use of evidence. Make use of a range of relevant and arguments in order to acquire evidence to support assertations. (30 marks)

 Organisation and presentation. (10 marks)

 Conclusion and appropriate references. (15 marks)