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ECOS3007 International Macroeconomics Semester 1 Practice Questions for Lecture Topic 4




Question;1.What is the view of the relation between aggregate demand and output reflected in Thirlwall?s balance of payments-constrained growth thesis?2.What significance is attributed by Thirlwall to movements in growth rates vis a vis movements in the real exchange rate as a means of eliminating balance of payments imbalances?3.What is the economic interpretation of Thirlwall?s equation for the balance of payments-constrained growth rate?4.What does Thirlwall?s analysis assume about price elasticities and cross elasticities of demand?5.Assume for argument?s sake that all countries in the world are growing at less than the rate required for full-employment of their respective labour force, and that some of these countries are balance of payments-constrained and some are not. What is the significance of Thirlwall?s thesis in terms of allowing for world growth closer to that required for full-employment?6. Supposing instead of a balanced trade account, that equilibrium in the balance of payments is defined in terms of a sustainable ratio of foreign debt to income. What factors determine the nature of the trade


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