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  • Second Interm Exam BIEMF MOCK

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    This document is a mock exam for a European Economic Policy course. It consists of two open-ended questions worth 15 points each. The questions cover: [1] the preventive arm of the Stability and Growth Pact, including the Medium Term Objective for member states to have close to balanced or surplus budgets in the medium run; [2] the dissuasive arm of the pact and its relationship to the former excessive deficits procedure, including the 3% deficit to GDP ratio and economic rationales for this threshold.

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    This document is a mock exam for a European Economic Policy course. It consists of two open-ended questions worth 15 points each. The questions cover: [1] the preventive arm of the Stability and Growth Pact, including the Medium Term Objective for member states to have close to balanced or surplus budgets in the medium run; [2] the dissuasive arm of the pact and its relationship to the former excessive deficits procedure, including the 3% deficit to GDP ratio and economic rationales for this threshold.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
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    Download as doc, pdf, or txt
    27 views2 pages

    Second Interm Exam BIEMF MOCK

    Uploaded by

    Nikola_mne
    This document is a mock exam for a European Economic Policy course. It consists of two open-ended questions worth 15 points each. The questions cover: [1] the preventive arm of the Stability and Growth Pact, including the Medium Term Objective for member states to have close to balanced or surplus budgets in the medium run; [2] the dissuasive arm of the pact and its relationship to the former excessive deficits procedure, including the 3% deficit to GDP ratio and economic rationales for this threshold.

    Copyright:

    Attribution Non-Commercial (BY-NC)
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    SIGNATURE:

    SURNAME.............................................. NAME...................................................... STUDENT I.D........................................

    EUROPEAN ECONOMIC POLICY 30056-BIEMF


    2nd INTERMEDIATE EXAM xx June 20xx (Time allowed: 45 minutes) MOCK

    The exam is composed of two open questions, worth 15 points each. Use only the exam papers for your answers, writing in the allocated spaces. Answers written outside the allocated spaces will not be corrected You can use the back of each sheet as scratch copy. Very important: remember to sign your exam paper, otherwise it will not be corrected Buon lavoro!

    Example of Open Question Answer to each of the two sub-questions: a. What is the economic rationale / functioning of the preventive arm of the current Stability and Growth Pact? What is the Medium Term Objective (MTO)?

    Clarify what MTO is: deficit close to balance or in surplus in the medium run. (2 pt) Mention that medium run stands for the economy growing at output potential / mention the convergence programmes / early warning mechanisms (1 pt) Clarify that the logic is to allow enough room of manoeuvre to automatic stabilizers (2.5 pt) => also Graph is ok but not mandatory Clarify that adjustment to the MTO have to be differentiated by Member States according to debt/growth rate and the structural position in the cycle (2 pt) b. What is the economic rationale / functioning of the dissuasive arm of the current Stability and Growth Pact? How does it relate with former TEC art. 104 on excessive deficits?

    Mention explicitly the 3% deficit / GDP objective (1.5 pt) Clarify the economic relationship between excessive deficit and stability (inflation rate), along one of the arguments discussed (spillover effect; moral hazard; no bail out) (2 pt) Clarify that the SGP writes down the rules behind the application of the Excessive Deficit Procedure of former art 104 => fines for the non-complying Member States (1 pt) Clarify the changes incurred by the current version of the SGP: breaching of 3% does not lead to immediate sanctions (1.5 pt) leniency if the breaching comes from structural reforms or a period of protracted negative growth (1.5 pt)

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