Macroeconomics Answers

What is inflation targeting? How the target inflation rate can be achieved by central banks

using Tylore rule?

“Inflation is always and everywhere a monetary phenomenon”. Discuss.

Discuss the Real Business Cycle model. Does the global economic crisis of 2007-09

support this model?

Critically analyze the New Keynesian approach to explain business cycles.

“According to New Keynesians small nominal rigidities have large macroeconomic effects”. Discuss the above statement.

Write this production function as a relation between output per worker and capital per worker.

Is this production function characterised by constant returns to scale? Demonstrate

Compute output when K = 49 and N = 81

Consider an economy that consists only of those who bake bread and those who produce its ingredients. Suppose that this economy’s production is as follows: 1 million loaves of bread (sold at Rs. 2.00 each); 1.2 million pounds of flour (sold at Rs. 1.00 per pound) and 100,000 pounds each of yeast, sugar & salt (all sold at Rs. 1.00 per pound). The flour yeast, sugar & salt are sold only to bakers, who use them exclusively for the purpose of making bread.

 a. b.

Calculate the total income of the economy.

How much value is added to the flour, yeast, sugar & salt when the bakers turn into bread?

*Production volume for product A was estimated at 1000 units.

*Only 80% production was achieved.

*Each unit of product A requires 0.5 hours at an hourly rate of N$8.50

*80% production volume was produced at 45 minutes per unit at an hourly rate of N$8.00

*Buys raw materials from local suppliers at N$3.50 per kilogram

*Each unit requires 1.5 kilograms

*Two Kilograms were used per unit

*Total monthly budgeted manufacturing overheads costs amounted to N$950

*Actual monthly manufacturing overheads cost was N$1200

*Lungameni Enterprises production manager view that manufacturing overheads cost be absorbed on basis of direct labour costs. There was no opening inventory and all units produced were sold.

Required:

1.For the information above calculate the gross profit / loss

2.Any recommendation for Lungameni Enterprise production manager?