Macroeconomics Answers

Using the Cobb- Douglas production function and the following data:

Output (Y) = $ 6 trillion, rental cost (rc) = 0.15, the share of capital in output (γ) = 0.4

Calculate the desired capital stock (K*)

Now suppose that Y is expected to rise to $ 7 trillion. What is the corresponding K*?

Suppose the capital stock was at its desired level before the change in the income was expected. Further, the rate of adjustment of actual capital stock to desired level (λ) = 0.4 in the flexible accelerator model of investment. What will the rate of investment be in the first year after expected income changes?

Does your answer in ‘part c’ refer to gross or

Write brief notes on the following econometric terminologies:

i. Coefficient of multiple determination (R2). 

ii. Type II error.

iii. Regressors. 

iv. Disturbance term (Ui).

v. Simple linear regression model. 

vi. BLUE properties

Why is it important that South Africa should be consideration of USA’s decisions

when deciding on its monetary policy stance?

five challenges to the South African economic growth

Why is it important that South Africa should be consideration of USA’s decisions 

when deciding on its monetary policy stance? 

, is simply determined from a cut-off point in the welfare

distribution, like the income or consumption level below which, a certain per

cent of the population is located.

a) Discuss the 3 types of data used in economics.

Discuss the 3 types of data used in economics.  

Consider the following situation for Upland and Downland. Each country half of its resources in Banana and half in Apple.

Apple. Banana

Upland 450 80

Downland 60 60

a. Does the figure represent Absolute or Comparative advantage or both?

b. What is the opportunity cost of apple for each country?

c. By how much will total output increase when the countries ( Download and Upland) specialize.

1. Differentiate between Absolute cost and Comparative cost advantage theories of International trade.

2. Explain reasons why countries engage themselves in trade.

3. Explain the range of trade protection instruments use in Nigeria.

4. Explain the main components of Balance of Payments.

5. Consider the following situation for Upland and Downland. Each country half of its resources in Banana and half in Apple.

Apple Banana

Upland 450 80

Downland 60 60

a. Does the figure represent Absolute or Comparative advantage or both?

b. What is the opportunity cost of apple for each country?

c. By how much will total output increase when the countries ( Download and Upland) specialize.