Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

7.9 QUESTIONS
 
1. In which market structure perfect information was assumed on 
the part of all economic agents? 
2. If all consumers have perfect information, can price dispersion 
for a given homogeneous product exist in the market if all 
conditions of the sale are identical? Why?
3. Most advertising is manipulative and provides very little 
information to consumers. True or false? Explain. 
4. What is the relationship between speculation and the 
economic of information? 
5. a) Adverse selection is the direct result of asymmetric 
information. True or false? Explain. 
b) How can the problem of adverse selection be overcome? 
6. a) How do credit companies reduce the adverse selection 
problem that they face? 
b) What complaint does this give rise to? 
7. Should education be viewed as an investment in human 
capital or a market signalling device? Explain. 
8. What is the relationship between moral hazard and 
externalities? 
9. What is meant by the efficiency wage? What problem is this 
intended to solve? 
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8 
MOUDLE 5 
 
IS-LM MODEL 
Unit Structure 
8.0 Objectives 
8.1 Introduction 
8.2 The IS 
– LM Model 
8.2.1 The Goods Market and the IS curve 
8.2.2 The Assets Market and the LM Curve 
8.2.3 Equilibrium in the Goods and Money Market
8.3 Factors Influencing Equilibrium Income and the Interest Rate 
8.3.1 Monetary Influences: Shift in the LM Schedule 
8.3.2 Real (Fiscal) Influences: Shift in the IS Schedule 
8.3.3 Fiscal Policy and Crowding Out Effect 
8.3.4 Monetary Accommodation and Policy Mix 
8.4 Summary
8.5 Questions