Macroeconomics Answers

Why does a horizontal LM curve imply that fiscal policy has the same effects on the economy as those derived in Keynesian Model (horizontal AS)?

What are the implications of a horizontal LM curve for the link between goods market and asset market?

Under what circumstances might the LM curve be horizontal?

You were planning to spend Saturday working at your part-time job, but a friend asks you to go for picnic. What is the true cost of going to picnic? Now suppose you had been planning to spend the day studying at the library. What is the cost of going to picnic in this case?

In recent years, the price of oil has fallen drastically. Explain if this is a result of:

a. A drastic reduction in the cost of production (i.e. shift in the supply curve)?

b. A fall in the demand for oil and oil products ( i.e. shift in the demand curve?

c. Other factors ?

(Hint: Search through the material on oil pricing in the global market) (10 marks)

What happned to the supply curve if the cost of production for oil decrease

Show, using the IS and LM curves why money has no effect on output in the classical supply

Why measuring price, income, cross and advertisement elasticities of demand for an

insurance product is good for the growth of the sector? Use supply and demand curves to

illustrate how each of the following events would affect the price/ or premium and quantity of

a private health insurance policy a) if you get benefits under swasthya bema yojna of the state

government b) a decrease in your average income level during pandemic c) if policy

premiums are expected to increase in coming future and d) if more tax benefits are provided

for taking this policy.

How will an increase in the unemployment rate affect bargaining power and nominal wages in the country-South Africa?

Imagine that the banking system received additional deposits of $100 million and that all the individual banks wish to retain their current liquidity ratio of 20%. If one-half of any additional liquidity is held outside the banking sector, by how much less will deposits have risen compared with (d) above? 

Imagine that the banking system received additional deposits of $100 million and that all the individual banks wish to retain their current liquidity ratio of 20%.What is the size of the bank multiplier?

Imagine that the banking system received additional deposits of $100 million and that all the individual banks wish to retain their current liquidity ratio of 20%. How much of these extra total deposits are matched by (i) liquid assets; (ii) illiquid assets?