MEC

MASTER OF ARTS
(ECONOMICS)
Second Year Courses

Assignments

For July 2018 and January 2019 Sessions

MEC-006 : Public Economics

MEC-007 : International Trade and Finance
MEC-008 : Economics of Social Sector and Environment
MEC-108 : Economics of Social Sector and Environment
MEC-109 : Research Methods in Economics
MECE-001 : Econometric Methods
MECE-003 : Actuarial Economics: Theory and Practice
MECE-004 : Financial Institutions and Markets

FACULTY OF ECONOMICS

SCHOOL OF SOCIAL SCIENCES

INDIRA GANDHI NATIONAL OPEN UNIVERSITY
MAIDAN GARHI, NEW DELHI – 110 068
 Master of Arts (Economics)
(TMA)
(2018-19)

Dear Student,

As explained in the programme guide for MEC, assignments carry 30 per cent
weightage in a course and it is mandatory that you have to secure at least 40 per
cent marks in assignments to complete a course successfully. Note that you have to
submit the assignments before appearing in Term End Examination of a course.

Before attempting the assignments please read the instructions provided in the
programme guide sent to you separately. In this booklet we have included the
assignments for all the courses pertaining to the second year. In each course there
is a Tutor Marked Assignment (TMA). You have to do the assignment for those
courses for which you have registered. Do remember that you have to prepare and
submit the assignments separately for each course. Make sure that you submit the
assignments well in time for those courses in which you plan to appear in the Term
End Examination.

Submission

For July 2018 session, you need to submit the assignments by March 31, 2019,
and for January 2019 session by September 30, 2019 for being eligible to appear
in the term-end examination. Assignments should be submitted to the Coordinator
of your Study Centre. Obtain a receipt from the Study Centre towards
submission.

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 MEC-006: PUBLIC ECONOMICS
Assignment (TMA)
Course Code: MEC-006
Assignment Code: MEC-006/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 500 words each) those in Section B carry 12 marks each (to be answered
in about 300 words each). In the case of numerical questions word limits do not apply.

SECTION-A

1. Discuss the basic idea behind the Pure Theory of Public Expenditure. Also explain the
theoretical rationale behind Lindahl Pricing.

2. Stating the ideal conditions for meeting the socially optimum criteria for utility pricing,
critically discuss the utility pricing rules for best solutions.

SECTION-B

3. Explain the concept of ‘plurality voting’.

4. What is the importance of ‘trans border policy coordination’?

5. Illustrate the ‘spill over effects’ of monetary policy using the Mundell-Fleming framework.

6. Using a ‘indirect utility function’ framework, indicate how while the income effect would
result from any form of taxation, the distortion effect stems only from the substitution
effect.

7. Explain the rationale behind the Buchanan Thesis for shifting the debt burden to future
generations.

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 MEC-007: INTERNATIONAL TRADE AND FINANCE
Assignment (TMA)
Course Code: MEC-007
Assignment Code: MEC-007/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 500 words each) those in Section B carry 12 marks each (to be answered
in about 300 words each). In the case of numerical questions word limits do not apply.

SECTION-A

1. Critically discuss the Ricardian theory of Comparative Advantage. How is it different from
Adam Smith’s theory of Absolute Advantage?

2. Explain the various concepts of terms of trade. Critically examine the behavior of terms of
trade as explained by Prebisch

SECTION-B

3. Explain multilateral framework of international trade. Explain its main features.

4. What are the various forms of economic integration? How is trade diversion different from
trade creation? Elucidate.

5. Describe the evolution of international monetary system. Examine the trends in the
international monetary and financial systems.

6. Discuss the various instruments of trade protection. Differentiate between quotas and
tariffs.

7. Critically examine the relative merits and demerits of the fixed and flexible exchange rates.

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 MEC-008: ECONOMICS OF SOCIAL SECTOR
AND ENVIRONMENT

Assignment (TMA)
Course Code: MEC-008
Assignment Code: MEC-008/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 500 words each) those in Section B carry 12 marks each (to be answered
in about 300 words each). In the case of numerical questions word limits do not apply.

SECTION-A

1. Discuss the trend in poverty estimates in different Indian states over the period 1988-2000.
Also discuss the rural-urban differential in calorie intake vis-a-vis the data on consumption
expenditure for the year 2000.

2. Explain how the different ‘social determinants’ impact on the health status of the people.

SECTION-B

3. How did the transformation from neoclassical to institutional economics come about:
explain.

4. Bring out the essential difference in the two approaches of ‘shadow prices’ and ‘hedonic
pricing method’ as valuation tools of environmental functions.

5. Write a brief note on the types of common property resource.

6. Critically bring out the inter-regional variations in expenditure on education in India as it

obtained in the early years of 2000s.

7. Make your own case of levying the ‘user fees’ for public health facilities bringing out the
arguments that can be offered for and against of such a proposal.

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 MEC-108: ECONOMICS OF SOCIAL SECTOR
AND ENVIRONMENT

Assignment (TMA)
Course Code: MEC-108
Assignment Code: MEC-108/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 500 words each) those in Section B carry 12 marks each (to be answered
in about 300 words each). In the case of numerical questions word limits do not apply.

SECTION-A

1. State the linkage between population and environment. Discuss the factors explaining
these linkages.

2. Explain the significance of Coase Bargaining Solution in solving the externality problem in
pollution abatement.

SECTION-B

3. Briefly outline the contribution of important theorists in according a place of primacy for
education in overall development.

4. How is the equilibrium price for physicians determined in the healthcare market?

5. Explain with the help of modified Hotelling rule how the present value of rents can be
maximised in the case of ‘extraction with stock effect’ for an environmental good.

6. Indicate the gaps in the conventional system of estimating the national income making it an
overestimate by not accounting for environmental degradation.

7. Write a note on the axioms of inequality measures.

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 MEC-109: ECONOMICS OF SOCIAL SECTOR

AND ENVIRONMENT

Assignment (TMA)

Course Code: MEC-109

Assignment Code: MEC-109/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 500 words each) those in Section B carry 12 marks each (to be answered
in about 300 words each). In the case of numerical questions word limits do not apply.

SECTION-A

1. Explain the research perspectives guiding quantitative and qualitative research. Do you find
any conflict among these research perspectives?

2. How can you evaluate the quality of employment in India? What are the data sources
available for a researcher who wants to assess the quality of employment?

SECTION-B

3. What do you understand by the term ‘Research design? Explain with illustration the
distinction between research design and research methods.

4. State the concept of composite index. Which steps are involved in construction of composite
index? How can you deal with missing values and outliers in construction of composite
indexes?
or

Which steps are involved in construction of price indexes. State with example the various
uses of price indexes.

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5. Under what circumstances would you like to use canonical correlation analysis in preference
to multiple regression? State the procedure for computation of canonical correlation.

or

Distinguish between PRA and RRA. Under which circumstances would you prefer to use
RRA to Sampling Survey Approach in Research?

6. Distinguish between data collection and data generation. Discuss the various tools used in
data generation.

7. Explain any three of the following:

i) Action Research

ii) Case study

iii) Goodness of fit

iv) Sen’s Index

v) Scientific explanation

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 MECE-001: ECONOMETRIC METHODS

Assignment (TMA)

Course Code: MECE-001

Assignment Code: MECE-001/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 500 words each) those in Section B carry 12 marks each (to be answered
in about 300 words each). In the case of numerical questions word limits do not apply.

SECTION-A

1. The relationship between Y and X is given by 𝑦𝑖 =∝ +𝛽𝑥𝑖 + 𝑢𝑖 where 𝑢𝑖 follows classical

assumptions. Consider the following set of data and answer the questions.

Y 11 12 13 14 15
X 18 16 19 22 20

a) Estimate parameters of the model from the following data by using OLS method.

b) What is the estimate of error variance in the above case?

c) Find the value of 𝑅 2 for the above data.

2. a) What is simultaneity bias? Explain the conditions required for identification of

parameters in a simultaneous equation model.

b) In the following two-equation system check the identification status of both the
equations.
𝑌1 =∝1 +∝2 𝑌2 + 𝛽1 𝑍2 + 𝑢1
𝑌2 = 𝛽2 + 𝛽3 𝑌1 + 𝛽4 𝑍1 + 𝛽5 𝑍2 + 𝑢2

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 SECTION-B

3. What are the limitations of the linear probability model? Explain how these limitations can
be avoided.

4. What are its consequences of autocorrelation? How do you detect it? Write down the steps
you would follow to remove the autocorrelation problem in a dataset.

5. Suppose the variance of the error term in a regression model is not constant. What are its
consequences on the OLS estimators? What remedial measures would you take to tackle
the issue.

6. Suppose the explanatory variable in a regression model is measured with error. What are its
consequences? What steps will you take to solve the problem?

7. Write short notes on the following:

a) Dummy variable trap

b) Chow test

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 MECE-003: ACTUARIAL ECONOMICS:
THEORY AND PRACTICE

Assignment (TMA)

Course Code: MECE-003

Assignment Code: MECE-003/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 500 words each) those in Section B carry 12 marks each (to be answered
in about 300 words each). In the case of numerical questions word limits do not apply.

SECTION-A

1. (a) Why is it necessary to model interest stochastically? How will you develop a model of
stochastic interest?

(b) Discuss the difference between classical and Bayesian analysis of credibility theory.

2. If you are asked to demonstrate the interplay between finance and insurance principles,
how would you do that by using unit-linked insurance contract as an example?

SECTION-B

3. What is the fundamental principle of equivalence used in insurance? What changes have
come up recently in applying that principle due to inclusion of financial valuation
practices? Give reasons in support of your answer.

4. Define a mixed Poisson Process. When is it called a negative binomial process?

5. Formulate the Lundberg Risk Model. What modifications you would like to introduce in it
for providing an alternative.

6. State the Optional Stopping Theorem. Outline the technique used for analysing the
collective risk?

7. Write short notes on: (a) Compound-Poisson Process; (b) Black-Scholes Theorem; (c)
Panjer Recursion; (d) Risk neutral evaluation.

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 MECE-004: FINANCIAL INSTITUTIONS AND MARKETS

Assignment (TMA)

Course Code: MECE-004

Assignment Code: MECE-004/AST/2018-19
Maximum Marks: 100

Note: Answer all the questions. While questions in Section A carry 20 marks each (to be
answered in about 500 words each) those in Section B carry 12 marks each (to be answered
in about 300 words each). In the case of numerical questions word limits do not apply.

SECTION-A

1. Describe the nature of the financial system in a modern economy giving the important types
of constituent institutions, markets and instruments. Explain the concept of flow-of-funds in
the financial markets

2. Discuss the Markowitz theory of efficient portfolio selection. How does the Capital Asset
Pricing Theory (CAPM) theory build on it?

SECTION-B

3. Explain the Arbitrage Pricing Theory.

4. Explain the need for, and role of depository systems in secondary markets. Explain the
concept of custodial services.

5. Give a theoretical model of central banking, bringing out the relationship between the
monetary base and monetary aggregates. What are instruments of monetary policy used by
central banks?

6. Compare the impact of monetary policy under fixed exchange rates with those under
flexible exchange rates.

7. Discuss the concept of leverage for a firm. Discuss the important financial and leverage
ratios used. Explain the Merton-Miller theorem.

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