BAEC2204 Higher College of Technology Principles of Macroeconomics Final Exam Questions Macroeconomics assignmentsee file attachedanswers should be clear..

BAEC2204 Higher College of Technology Principles of Macroeconomics Final Exam Questions Macroeconomics assignmentsee file attachedanswers should be clear………………………….. HIGHERCOLLEGE OF TECHNOLOGY
DEPARTMENT: BUSINESS STUDIES
Final Examination:
Assignment Based Assessment
Semester: II
A. Y.: 2019 / 2020
Diploma I and II Year
Start Date: 29-05-2020
Time: 2.00 PM
Due Date: 31-05-2020
Time: 2.00 PM
Student Name
Student ID
Specialization
Section
Level
Diploma Second Year
Course Name
Principles of Macroeconomics
Course Code
BAEC2204
For official Use Only
Question No.
Max. Marks
1
5
5
5
5
5
5
5
5
5
5
2
3
4
5
6
7
8
9
10
Grand Total
50
Marks
Obtained
Marks
Question No.
1
2
3
4
5
6
7
8
9
10
Max.
Marks
5
5
5
5
5
5
5
5
5
5
50
First Marker:
Second Marker:
Date:
Date:
Obtained
Marks
Guidelines for Students to Submit the Assignment:
1) The final assessment for semester 2, 2019-20 will be done through comprehensive
assignment for a maximum of 50 marks. The schedule of the final assessment is
available
in
the
college
website.
https://www.hct.edu.om/about/thecollege/announcements/final-assessment-timetable-041620
2) All the students are expected to have only one assignment at one time. In case, if the
students have more than one assignment on the same day, please report to the exam
committee through the following mail id. exam.bus@hct.edu.om as soon as possible.
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date and time the assignment is uploaded. Students are advised not to wait till the last
moment of the deadline to submit the assignment.
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opening of the assignment. The answer to the assignment need to be uploaded in elearning within 48 hours.
5) The answer to the assignment can be uploaded only one time. No requests for
resubmission of the assignment will be entertained.
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related to final assignment.
For Academic related support :
Business Courses
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assignment will be assessed as per the College Assessment Policy. Student will be
investigated in case of plagiarism as per the College policy and procedures. The
maximum acceptable similarity index is 25%.
10) In case the students face any technical issues regarding the submission of assignment,
the answer to the assignment can be mailed to the concerned lecturer within the 48-hour
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13) The students need to answer the assignment in the prescribed number of words as
mentioned in the assignment.
14) The students need to follow the following format while preparing the assignment :
Font Style: Times New Roman
Font Size: 12 point for body and 14 point for Headings
Line Spacing: 1.5
Margin: 2.54cm (One inch) on all the sides
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15) Students who will fail to submit their assignment as per the deadline given are required
to make an online appeal along with the valid excuses as the guidelines which will be
announced through the college website or e-learning portal within three days from the
date of submission deadline.
Section A
Important: – Each answer should have minimum 100 words, if data or table used to support
your answer, must give proper reference
Only upload answer with question number in MS word, please don’t copy any question, case,
instruction or any other information
Read the economic case scenario and answer the questions based on it:
Oman has far fewer resources to draw on than most of its neighbors. Its foreign exchange
reserves and sovereign wealth fund assets are together worth around 50% of GDP, far less than
most Gulf neighbors have, according to London-based Capital Economics. The country has oil
and gas reserves, but they don’t provide enough income to cover the government’s large
expenditure bill. In essence, Oman has been living beyond its means for many years, running
persistently large budget and current account deficits. To finance these, the government keeps on
issuing debt. The debt-to-GDP ratio has risen from 5% in 2014 to 60% of GDP now.
To help match its income and spending, Muscat has also looked to its richer neighbors for
support, but while it has been able to secure some assistance, it has not been given as much as
Bahrain. Like most Gulf countries, Oman keeps its currency pegged to the U.S. dollar in an
effort to provide more economic stability. This makes sense given the chief export, oil, is priced
in dollars, but maintaining the exchange rate is not always easy due to the weakness of the
economy.
In the absence of substantial fiscal measures to curtail the government deficit, fiscal and external
buffers will continue to erode,” the agency warned in a statement issued on January 12. “We
anticipate that government may face a difficult trade-off in the coming months between
addressing social concerns, partly arising from weak growth and high youth unemployment, and
rising fiscal, external, and funding pressures.
The Omani authorities have proved wary of putting the population under too much pressure.
Intermittent protests over the past decade have generally been met with promises of more
spending and job creation. New taxes have been repeatedly delayed. A value-added tax (VAT) is
now due to be introduced in 2021, years later than initially planned, but could easily be
postponed once again.
The World Bank has previously warned that “A key risk facing Oman is that the pace of fiscal
and structural reforms may slow, hurting investor confidence and prospects for debt
sustainability.”
In current scenario the economy is facing various challenges including declining demand in
consumer market, downfall in industrial growth, declining export, crushing crude oil prices and
fiscal losses. If the current scenario will not be under control under measured time frame then it
may cause various economic growth and development related issues, employment related issues
and leads to declining fiscal reserves.
1. Based on the above economic scenario, describe the fiscal economic policy required to
overcome these challenges. [definition 2+ relating to case 3= 5 Marks]
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2.
As mentioned in the case “We anticipate that government may face a difficult trade-off
in the coming months between addressing social concerns, partly arising from weak growth
and high youth unemployment, and rising fiscal, external, and funding pressures.”
Describe what could be the role of commercial bank to support economic growth in such
scenario. Explain with valid reasons. [2+3=5 Marks]
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3. “Oman keeps its currency pegged to the U.S. dollar in an effort to provide more
economic stability.” What is pegging currency and how Oman can maintain economic
stability by pegging the currency? [2+3=5 Marks]
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4. Discuss the monetary policy required to solve the issues as discussed in the article.
Explain the steps to be taken by central bank to empower economic activities.
[2.5+2.5 = 5 Marks]
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Section B
Important: – Each answer should have minimum 100 words, if data or table used to support
your answer, must give proper reference
Read the economic case scenario and answer the questions based on it:
The inflation rate in the Sultanate, measured by movement in the average Consumer Price Index
(CPI), fell by 0.15 per cent in December 2019 compared to the same month of 2018, according to
the latest data released by the National Centre for Statistics and Information (NCSI) on consumer
prices’ index. According to the report, the inflation rate in December fell by 0.21 per cent
compared to November 2019.
However, the prices of housing, water, electricity, gas, and other fuels fell by 0.33 per cent;
transport by 1.83 per cent; communication by 0.26 per cent; and miscellaneous goods and
services by 4.78 per cent in December 2019 compared to the same month of the previous year.
The food and non-alcoholic beverages group witnessed a price rise by 1.13 per cent; furnishings,
household equipment, and routine household maintenance by 4.98 per cent, health by 0.97 per
cent, recreation and culture by 0.01 per cent, education by 2.18 per cent and restaurants and
hotels by 0.72 per cent.
Among foods and non-alcoholic beverages group, a marked rise was witnessed in the price of
fish and seafood by 2.01 per cent and vegetables by 0.02 per cent. However, the price of milk,
cheese and eggs, fruit, and oils and fats fell by 0.21 per cent, 0.73 per cent, and 0.25 per cent,
respectively.
However, non-alcoholic beverages registered a price rise of 13.55 per cent, while those of
clothing and footwear fell by 2.22 per cent in December 2019 against the same period of 2018.
Consumer prices in Oman decreased by 0.29 percent year-on-year in March of 2020, following a
0.18 percent rise in the prior month, as prices fell mostly for housing & utilities (-0.6 percent vs 0.3 percent) and furnishings (-0.1 percent vs 5.4 percent). Conversely, prices rose faster for food
& non-alcoholic beverages (1.3 percent vs 1.2 percent); health (1 percent vs 0.2 percent) and
restaurants & hotels (1 percent vs 0.8 percent). On a monthly basis, consumer prices went down
0.51 percent, after falling 0.34 percent in the prior month.
Source:-https://timesofoman.com/article/2199433/business/omans-inflation-drops-015-inoctober
5. CPI of different products as given in the case is different. Analyze the variation in the
inflation rate in various products and explain how it will affect the AD of the economy.
[2+3= 5 Marks Marks]
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