Müəllimin adı: Alıyev Xətai Şahin
Fənnin adı: Economic Regulation
Qrupun nömrəsi: 1082
Mövzu 1. Economic policy - theory and practice: concepts
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Explain attitudes of an economist in positive economics, normative economics, and political economics approach. Give an example related to economic policy.
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The difference between positive economics and normative economics in economic policy analyses context.
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Explain the question economists – those are involved in public decisions face. It is stated that “the question is not “how can unemployment be reduced?”. Why?
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What do policymakers do? Explain all the tasks as grouped into six categories.
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A simple representation of economic policy: objectives, instruments, and institutions.
Mövzu 2. Economic policy evaluation
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The three functions of economic policy: explain briefly.
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Explain why and when state intervention for allocation of resources, macroeconomic stabilization, and income redistribution is required.
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Explain following utility functions in the context of income distribution: “Benthamian” function, “Rawlsian” function, and strict equalitarianism approach. Explain by using graphical illustration.
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Ex-ante and ex-post economic policy evaluation: explain on an example.
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Explain allocation, stabilization, and redistribution effects of reduction in income tax, increase in government expenditure, and increase in social transfers briefly.
Mövzu 3. Economic policy in a complex world: living with limits
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Main limits to the traditional approach to economic policy: living with limits and the limits of knowledge.
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Explain “irreversibility” character of economic policy decisions: why UK and Sweden exercised the option to “wait and see” for joining Eurozone?
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Explain the notion of “rational expectations” and its challenges for economic policy planning.
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Are expectations of individuals and firms (including banks and other large corporations) rational? Briefly discuss.
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Why credibility of public intervention is very important for successful economic policy implementation?
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Explain challenges of the limits of information and existence of asymmetric information within the government.
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Why politicians may depart from the general interest?
Mövzu 4. Economic policy in acomplex world: living with interdependence
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Political vs technocratic governance in economic policy.
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It is stated that “policymakers need to take into account the cross border implications of their decisions and their interactions with other governments”. Why?
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Why international policy coordination is required?
Mövzu 5. Fiscal policy: issues and theories
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What is fiscal policy all about? Explain the notion of budget (revenues and expenditures), and budget deficit.
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Measuring the fiscal imbalance.
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Public debt and debt accumulation
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Demand-side effects: the Keynesian analysis
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Effect of a Keynesian expansionary fiscal policy. Explain by using graph.
Mövzu 6 Fiscal policy: issues and theories
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Why “the room for maneuver for fiscal policymakers” is generally limited in the short run? Justify your answer.
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Explain the sources of deficit financing: what is the impact over inflation?
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Financial balance vs primary balance: explain the difference
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Explain the solvency of the public sector: what happens if solvency decreases?
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Why governments cannot fully provide financial reporting as private sector does? Explain each of the reasons briefly.
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What happens when aggregate demand is insufficient? Explain the role of fiscal policy in such situation. Show on an example.
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Explain the notions of expansionary fiscal policy and contractionary fiscal policy and their impact over total output.
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Explain the notions of expenditure multiplier and tax multiplier. Use an example calculation to justify your explanation.
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Assume that in Azerbaijan economy, Marginal Propensity to Consume is … (or …%). How much change in national income will be if government expenditure increases … AZN? Explain your result from economic point of view.
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Assume that in the economy of Georgia, Marginal Propensity to Consume is … (or …%). How much change in national income will be if government expenditure increases … USD? Explain your result from economic point of view.
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Assume that in the economy of Turkey, Marginal Propensity to Consume is … (or …%). How much change in national income will be if tax revenues increases … USD? Explain your result from economic point of view.
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Assume that in the economy of Russian Federation, Marginal Propensity to Consume is … (or …%). How much change in national income will be if tax revenues increases … USD? Explain your result from economic point of view.
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What is Crowding Out effect? Explain on an example.
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Why it is argued that “tax cuts have no effect on spending and national savings”?
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Implications of Ricardian Equivalence: explain briefly
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Comment on the political economy of debt.
Mövzu 7-8: Monetary policy
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What is monetary policy? Explain money and monetary aggregates.
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Expansionary monetary policy vs contractionary monetary policy
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What do central banks do?
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Explain the price of liquidity. the rate applied to a repurchase agreement is 5%, a bank seeking liquidity from the central bank for 14 working days for an amount of 200 million euros, how much will have to pay the bank for this liquidity service?
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Explain money creation process by the central bank and commercial banks. Use an example to support your answer.
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The objectives of monetary policy. Explain all objectives briefly
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Explain the long-run neutrality of money and short-run nominal rigidities.
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Comment on Central Bank credibility and inflation targetting.
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Transmission channels of monetary policy: briefly explain three main transmission channels.
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Central Bank’s independence vs seigniorage revenues of the government. Why it is better to have technocratic governance for Central Banks?
Mövzu 9-10: International Financial Integration and Foreign-Exchange Policy
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Monetary policy vs exchange rate policy
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A brief history of the international monetary system
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Current-account convertibility and financial-account convertibility: what is the impact over exchange rate of a currency?
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Taxonomy of exchange-rate regimes: explain
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Exchange-rate dynamics: nominal, real and effective exchange rates
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Correlation between nominal and real exchange rates
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Explain the relationship between real exchange rates and the balance of payments.
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Marshall–Lerner condition and J –curve
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Briefly explain impossible trinity or Mundell’s triangle
Mövzu 11-12: Growth policies
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Why growth policies required?
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Explain the notion of convergence (absolute and conditional convergence) and conditioning variables for convergence
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Convergence and inequality: comment on the relationship between economic growth and inequality
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It is stated that “poor people are poor because they are poor”. In country level (i.e., poor country and rich country), explain this argument and justify your answer.
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Public policy roadmap in the short-run and long-run.
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Stimulating economic growth: the role of stabilization and allocation policies.
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Explain the interrelation between long-term trends and short-term fluctuations in an economy (from economic growth context).
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Do improving institutions matter for better economic growth? Justify your answer.
Mövzu 13-14: Tax policies
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What is taxation about? Explain benefits of taxation.
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One benefit of taxation is that “taxation can play a “paternalistic” role by protecting private agents from their own errors”. Discuss and comment on this argument. Support your answer by using examples.
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Explain the argument - “too much taxes kill taxes”: The Laffer curve
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How are taxes collected? Direct taxes and indirect taxes.
Mövzu 15: Overall evaluation of Azerbaijan’s economic policy
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Discuss fiscal policy implementation in Azerbaijan after 2000.
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Discuss Azerbaijan’s monetary and exchange rate policies after 2000.
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Discuss Azerbaijan’s tax policy and taxation system. Especially comment on the changes after 2014.
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