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A key feature of a macroeconomic model is whether it assumes that prices are flexible or sticky. According to most macroeconomists, models with flexible prices describe the economy in the long run, whereas models with sticky prices offer a better description of the economy in the short run. Which one of thoughts discussed above do you support? Why? Support your answer with evidence.
a person has 100 dollar to spend on two goods x and y whose respectively prices are 3 dollar and 5 dollar.
draw the budget line.
(Unit: RM million):
(S) = -500 + 0.15Yd
(I) = 400 - 150r
(G) = 500
(T) = 200 + 0.1Y
(Ms) = 5000
Transaction money demand = 0.25Y
Speculative money demand= 500-250r
P = 2
(a) Derive the functions of IS and LM in terms of interest rate (r) and income (Y).
(b) Calculate the slope of the IS and LM curves.
(c) Determine the equilibrium of interest rate and aggregate output in the economy.
(d) If the autonomous consumption has increases to RM500 million,
i. Calculate the new level of economic equilibrium.
ii. Calculate the size of the horizontal and vertical movements that occur.
iii. Sketch the changes that occurred before and after the increase in autonomous consumption and explain.
(e) If the real money supply decreases by RM200 million,
i. Calculate the new level of economic equilibrium.
ii. Calculate the size of the horizontal and vertical movements that occur.
iii. Sketch the changes that took place before and after the increase in the real money supply and explain.
A key feature of macro economics model is whether it assumes that prices are flexible or sticky. According to most macro economists,models with flexible prices describe the economy in the long run,whereas models with sticky prices offer a better description of the economy in the short run. Which one of thoughts described above do you support?why?support your answer with evidence.
A farmer grows a bushel of wheat and sells it to a miller for 100 dollar. The miller turns the wheat into flour and sells the flour to a baker for 300 dollar. The baker uses the flour to make bread and sells the bread to university for 600 dollar. The university students eat the bread. What is the value added by students?what is GDP in this case?
Find a data on GDP and its components,and compute the percentage of GDP for the following components for the years 1950,1975,and 2000.
A. Personal consumption expenditure
B. Growth private domestic investment
C. Government purchases
D. Net exports
E. National defence purchases
F. State and local purchases
G. Imports
Find a data on GDP and its components,and compute the percentage of GDP for the following components for the years 1950,1975,2000.
A. Personal consumption expenditure.
B. Growth private domestic investment .
C. Government purchases.
D. Net exports
E. National defense purchases
F. State and local purchases
G. Imports
Explain the relationship between inflation and unemployment, both in the short run and long run.
During the Revolutionary War, the American colonies
could not raise enough tax revenue to fully fund the
war effort. To make up the difference, the colonies
decided to print more money. Printing money to cover
expenditures is sometimes referred to as an “inflation
tax.” Who do you think is being “taxed” when more
money is printed? Why?
To
Explain the following terms and give example for each when necessary
1) GDP AND GNP
2) Approaches of measuring GDP
3) Unemployment and its type
4) Inflation and its type
5) Fiscal policy and tools
6) Monetary policy and tools
7) Objectives of Macroeconomic policies
