ECON633 INTERMEDIATE MACROECONOMICS

The purpose of the Assignment is for learning and skills acquisition as much as it is for marks.
The Assignment will help you practice the application of useful software, and to gain other skills.
However,  in  particular,  the  Assignment  should  help  you  master  our  most  important  model,  the
Mundell-Fleming  IS-LM  /  AD-AS  /  IP  model  of  the    economy.    This  will  be  of  direct
advantage to you as this is the basis for several possible Final Examination questions.
By  now  in  lectures  we  have  covered  the  Mundell-Fleming  model,  and  of  course  it  is  also  fully
explained in the textbook.  This assignment tests your mastery of the model.
Your  task  is  to  build,  in  Powerpoint,  an explanation  of the  effect  on  the  economy  of  an
expansionary Monetary Policy.
Use  the  Custom  Animation  function  to  show  the  shifts  of  curves  and  changes  in  other
variables, in the right sequence.
By  now  you  will  have  seen  an  example  of  this  in  lectures.   Use  textboxes  to  give  brief
explanations  of  what  is  happening  at  each  stage  of  the  adjustment  process  from  SR  to LR.
Showing  the  shifts  of  curves  in  the  correct  sequence,  and  explaining  those  shifts  and  other
changes, will be excellent preparation of a similar question is asked in the Final Exam.  Fit the
entire exercise on a single Powerpoint slide (as seen in lectures, on one diagram on the board).
As with so much of what we do, the purpose is not simply to accumulate marks.  The purpose is
to  help  you understand  the  model,  which  will  then  help  you  answer  a  very  similar  compulsory
question in the Final Exam (which in turn will help create a strong case that you have mastered
the key material in the Unit, as a basis for passing the Unit overall).
You already have all the basics of the model from lectures.  This will be a fairly simple example;
you will see for instance that there are only three AD curves in the lecture example (and in the
textbook version, only two).  The small number of curves is achieved by omitting a lot of details;
in your assignment you can be more adventurous (it is possible for example to have four or five
AD curves, to more fully show the sequence of changes in the economy caused by the change
in monetary policy).  Keep in mind though that in your attempt at this question in the Final Exam,
given the time constraint, you will need to avoid too complicated a diagram.  You can keep this
in mind when doing your assignment (which after all is practice for that exam question).