Section A

1) In the context of policy coordination, state the two forms in which externalities might result. Also, discuss the implication of the term ‘structural interdependence’ in this regard.

2) Explain the concept of ‘crowding of private investment’ outlining its three types.

Section B

3) Outline the role of government in a ‘mixed economy’.

4) Highlight the significance of Buchanan’s Contractual Theory.

5) With suitable illustrations show how a disequilibrium in one aspect can bring about a chain of reactions with multiple equilibria in ‘international policy coordination’.

6) Discuss the sources of ‘internal debt’ which facilitate the government in meeting its borrowing needs.

7) With the help of a suitable diagram, point out the welfare gains from ‘decentralization’.