MEC

MASTER OF ARTS
(ECONOMICS)
First Year Courses

Assignments

For July 2018 and January 2019 Sessions

MEC-001/101 : Microeconomic Analysis

MEC-002 : Macroeconomic Analysis
MEC-003/103 : Quantitative Methods
MEC-004 : Economics of Growth and Development
MEC-005/105 : Indian Economic Policy

FACULTY OF ECONOMICS

SCHOOL OF SOCIAL SCIENCES

INDIRA GANDHI NATIONAL OPEN UNIVERSITY
MAIDAN GARHI, NEW DELHI – 110 068
 Master of Arts (Economics)
(TMA)
(2018-19)

Dear Student,

As explained in the programme guide for MEC, assignments carry 30 per cent
weightage in a course and it is mandatory that you have to secure at least 40 per
cent marks in assignments to complete a course successfully. Note that you have to
submit the assignments before appearing in Term End Examination of a course.

Before attempting the assignments please read the instructions provided in the
programme guide sent to you separately. In this booklet we have included the
assignments for all the courses pertaining to the second year. In each course there
is a Tutor Marked Assignment (TMA). You have to do the assignment for those
courses for which you have registered. Do remember that you have to prepare and
submit the assignments separately for each course. Make sure that you submit the
assignments well in time for those courses in which you plan to appear in the Term
End Examination.

Submission

For July 2018 session, you need to submit the assignments by March 31, 2019,
and for January 2019 session by September 30, 2019 for being eligible to appear
in the term-end examination. Assignments should be submitted to the Coordinator
of your Study Centre. Obtain a receipt from the Study Centre towards
submission.

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 MEC-001/101: MICROECONOMIC ANALYSIS
Assignment (TMA)
Course Code: MEC-001/101
Assignment Code: MEC-001/101/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 700 words each) those in Section B carry 12 marks each (to be answered
in about 500 words each).

SECTION-A

1. (a) Explain with the help of diagram how does consumer attain equilibrium given the
utility function U (x, y),the budget constraint Px X + Py Y < M where x and y are the
two goods and Px and Py are the prices of good x and good y respectively and M is the
income of the consumer.

(b) With the help of diagram, State the relationship between the compensated and the
uncompensated demand curve in terms of normal and inferior goods.

2. (a) Explain with example the concept of a Homogeneous production function.

Given a production function
q = AL0.5K0.8
where q represents total production, L and K stands for Labour and capital respectively,
and A is the technology coefficient, what are the returns to scale for such a production
function?

(b) “Homothetic production function includes Homogeneous production function as a

special case.” Justify this statement.

SECTION-B

3. Using appropriate diagrams, explain each of the three conditions for Pareto optimality
satisfied by a perfectly competitive economy. What are the implications of the First
Fundamental Theorem of Welfare Economics for social policy?

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4. (a) Explain the concept of a Perfect Bayesian equilibrium?

(b) What is the Bayesian Nash equilibrium? How is it different from Perfect Bayesian
equilibrium?

5. What is Kaldor’s compensation principle? How is it different from Hick's compensation

principle?

6. (a) Define the concept of Pooling Equilibrium in relation to the Insurance market with
Asymmetric information. Is this equilibrium feasible?

(b) While modelling Insurance markets in presence of asymmetric information, a

Separating equilibrium is often preferred instead of a Pooling equilibrium.” Justify the
statement. Under what conditions, a separating equilibrium may also not exist?

7. At equilibrium, among the three market forms, viz. Perfect competition, Monopoly and
Monopolistic competition, which market form(s) result in the maximum aggregate output
and the minimum market price? Give reasons with illustration.

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 MEC-002: MACROECONOMIC ANALYSIS
Assignment (TMA)
Course Code: MEC-002
Assignment Code: MEC-002/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 700 words each) those in Section B carry 12 marks each (to be answered
in about 500 words each).

SECTION-A

1. Compare and contrast between the Ramsey model for the central planner and the Solow
model for economic growth (your answer should include the assumptions, important
equations, phase diagram and its interpretation).

2. Explain, through appropriate IS-LM curves, the type of monetary and fiscal policies a
government should take to deal with recession in an open economy.

SECTION-B

3. Explain how you can reconcile the long run vertical Phillips curve with the short run
downward sloping Phillips curve.

4. If the assumptions of the Solow model are taken to be true, explain how growth rates
converge across countries.

5. Bring out the salient features of the real business cycle theory.

6. What, according to Keynesian economists, are the factors that lead to rigidities in wages
and prices?

7. Write short notes on the following.

a) Permanent income hypothesis

b) Rational expectation hypothesis

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 MEC-003/103: QUANTITATIVE METHODS
Assignment (TMA)
Course Code: MEC-003/103
Assignment Code: MEC-003/103/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 700 words each) those in Section B carry 12 marks each (to be answered
in about 500 words each).

SECTION-A

1. a) What is a first order differential equation? When would you like to use this equation?
List the steps you would follow to find solution for homogenous and non-homogenous
differential equations.

b) Find general and particular solution of the following equation

𝑑𝑦
+ 10𝑦 = 15; 𝑦(0) = 0
𝑑𝑥
2. Under perfect competition a firm produces two commodities A and B and their given prices
are P1 = 5 and P2 = 3, respectively. Accordingly, the firm’s revenue function R = 5q1+3q2.
Where q1and q2 represent the quantity of output of the two products, respectively. The firm’s
cost function is C = 2 q12 + 2 q22+ q1q2. Find the profit maximizing output and Hessian matrix.
Also draw your conclusion from the Hessian matrix.

SECTION-B

3. a) State the Hawkins-Simon conditions in the context of input-output analysis.

0.2 −0.2
b) Suppose the technology matrix is |𝐴| = | |.
−0.9 0.3
Find whether any solution is possible for the underlying system or not.

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4. From the following data, obtain the two regression equations Y on X and X on Y.

X 2 4 6 8 10
Y 5 7 9 8 11

5. If 𝑥̅ is the sample mean, prove that the expected value of 𝑥̅ , that is E (𝑥̅ ), equals the
population mean (μ).

6. What is the difference between probability density function (PDF) and Probability mass
function (PMF)? Write down the properties they must satisfy.

7. Solve the following linear programing problem model in x1 and x2:

Maximize Z = 5x1 +10 x2
Subject to x1 +3 x2 ≤ 50
4x1 +2 x2 ≤ 60
x1 ≤ 5
x1 , x2 ≥0

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 MEC-004: ECONOMICS OF GROWTH AND DEVELOPMENT
Assignment (TMA)
Course Code: MEC-004
Assignment Code: MEC-004/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 700 words each) those in Section B carry 12 marks each (to be answered
in about 500 words each). In the case of numerical questions word limits do not apply.

SECTION-A

1. Examine the effect of population growth in the Solow model of economic growth. Discuss
how the Solow model could be used to explain poverty traps in developing nations.

2. Describe the Mankiw-Romer-Weil extension to the neoclassical model to include human

capital. Explain why diminishing returns to capital do not take place in the AK model.

SECTION-B

3. Distinguish between economic growth and development. Briefly mention the main benefits
that economic growth confers upon society.

4. Describe Pasinetti's theory of economic growth and distribution.

5. Describe the various approaches to the measurement of total factor productivity.

6. What are the main propositions of the Real Business Cycle model? Describe the basic
structure of a prototype Real Business Cycle model.

7. Compare and contrast the Uzawa two-sector growth model with the Feldman model.

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 MEC-005/105: INDIAN ECONOMIC POLICY
Assignment (TMA)
Course Code: MEC-005/105
Assignment Code: MEC-005/105/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 700 words each) those in Section B carry 12 marks each (to be answered
in about 500 words each).

SECTION-A

1. “Indian economic environment has undergone dramatic changes with a shift in

development strategy”. Comment.

2. How are the inequalities of income measured in an economy? Examine the policy
implications of widespread poverty and inequality in the Indian economy. Do you think
that social protection can play an important role in mitigating poverty and inequality?

SECTION-B

3. Explain the nature of crises in Indian agriculture. What suggestions would you like to
make for sustainable growth of Indian agriculture?

4. Explain the important issues crucial for promotion of Indian exports and hence need to be
addressed in India’s trade policy.

5. “The financial sector in India is still in a state transition”- Comment.

6. “Rapid Industrialization and diversification of the Industrial structure have been twin
objectives of industrial policy in India”. In the light of this statement critically examine
‘Make in India’ Programme.

7. Do you agree that the existing institutional structure in India have not led to good
governance outcome? Give reasons in support of your answer.