# Macroeconomic Principles II: Short-Run Effects

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EC2002 Macroeconomic Principles IICoursework assignment FAQ and further guidelines1.Should I answer all three questions?Yes, consider the three questions as three sections of the same assignment. But note thatyou only need to write one introduction and one conclusion that present the main pointsabout the assignment.2.Can I draw diagrams by hand and scan them to include them into the document?Yes, absolutely fine. Just remember you need to submit the assignment electronically.3.Can I attach the diagrams/tables at the end in an appendix?Yes, you can either include them in the main text or put them in the appendix. Just makesure you refer to them clearly in the text.4.What is included in the word count? The word count includes the main text only (including introduction and conclusion) butdoes not include bibliography, figure captions, footnotes. Also, the word count will beincreased by a further 300 words before any penalty will kick in. However, remember thisis not a minimum it is a maximum and always aim at concise answers.5.You can use algebra to derive the result, however, you will also need to illustrate theanswer graphically and explain it in words.6.Also pay attention to citing your sources in the text as well as writing completebibliography at the end of your document (check ‘How to cite.ppt’ on Blackboard forinstructions on how to do this).In general, a good assignment will show the following elements:The theoretical part (paragraphs 1 and 2 of the assignment) should include diagrams thatillustrate the short-run effects of a decrease in consumer confidence as well as the effects offiscal and monetary policies (if any). 1.Diagrams: Drawn correctly, curves and axis named correctly; curves shift in thedirection. You will basically need at most 1-2 graphs per theoretical part, that is, one to showthe impact of the initial shock and then another to illustrate the effects of the monetary-fiscalpolicy-mix. 2.Explanations: Correct intuition (explanation), not just the stating to which direction thevariables move but explaining the mechanism behind the movement. As for the empirical part (the third paragraph), it should consist of actual data on thevarious variables that you discuss in the theoretical part. Since we are talking about short-run, a time horizon of about 5 years will be sufficient. Data should be presented in a clearand informative way, preferably in a table. There should be discussion about whether thedata is consistent with the theoretical expectation, i.e., the results you got from thetheoretical part. Even if the data does not fully agree with the theory, it is not automaticallywrong. Do not try to force the data to match the theory or visa versa. But you need to discuss

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