1.

In the long run, if the government of India implemented a policy that reduced
national saving, the Indian real exchange rate would depreciate and Indian net
exports would rise.
(1.5 Points)

2.The Solow growth model (without technological progress) predicts growth

rates will decline over time.
(1.5 Points)

3.The Golden Rule level of the steady-state capital stock will be reached
automatically if the saving rate remains constant over a long period of time. (1.5
Points)

4.According to Mankiw (2009), in the Great Depression, the fallen in real money
balances made LM curve shift to the left and interest rose.
(1.5 Points)

5.The terrorist attacks on New York City in 2001 made the firms increase their
investment, and the American IS curve shifted rightward.
(1.5 Points)

6.CASE STUDY QUESTION: According to the Global Public Debt data, countries
have high government debts (the debt/GDP is above 90%) are Greece, Italy,
Japan. - What are possible consequences that high government debt may create
to these countries (1.5 marks)? - Choose 2 countries among these, and explain
what are the main differences in the causes of such high government debt (1
mark)?
(2.5 Points)