Macroeconomics Answers

Consider the following  information:  

Marginal propensity to consume = 0,9

Investment = R180 million

Autonomous consumption = R105 million. The equilibrium level of income is:-

Question 2 options:

1800 million.

2800 million.

0,9Y.

2850 million

1.     Consider the following model of a hypothetical market for MSW management services:

                                   MPB   =         25 − 2Q          

                                   MPC    =          4 + Q

                                   MEC    =         0.5Q,

           where Q is the number of trash containers per household per month.

A.     Quantitatively determine the effect of the resource misallocation due to: (12 marks)

a.     the presence of the negative externality, and

b.     the use of a flat fee pricing system in the presence of a negative externality.

Determine the dollar value of a waste-end charge that would restore efficiency to this market. Explain your answer intuitively. 

Given that purchasing power parity holds, what would be the price of oil in terms of Peruvian sols. Use the following information for your calculations:

Gold = $300 per ounce in U.S.

Gold = 2,400 sols per ounce in Peru

Oil = $25 per barrel in U.S.

A. 3.125

B. 96

C. 250

D. 200

There are how many Bahraini dinars per U.S. dollar if the nominal exchange rate is 3 Argentine pesos per U.S. dollar, and 0.202 Bahraini dinars per Argentine peso?

A. 0.333

B. 0.606

C. 4.95

D. 0.67

Cuba is an exporter of grain to North Korea. In a closed economy Cuba must have a domestic price that is _____ the world price of grain.

A. less than 

B. greater than 

C. equal to 

D. close to 

Japanese currency went from 98 yen per U.S. dollar to 95 yen per U.S. dollar. This means the Japanese yen has ______ and the U.S. dollar has ________.

A. appreciated; appreciated

B. appreciated; depreciated

C. depreciated; appreciated

D. depreciated; depreciated

Ceteris paribus, in the situation where Americans begin to decrease their purchases of Mexican goods, what will happen to the supply of dollars in the foreign exchange market? What will happen to the exchange rate for Mexican pesos relative to American dollars?

A. increase; increase

B. increase; decrease

C. decrease; decrease

D. decrease; increase

Suppose a U.S marble maker can import 50% of the total quantity demanded of marbles. This is an example of a(n) ________.

A. tariff 

B. quota 

C. trade limit 

D. import tax 

The nominal exchange rate of the kwacha (currency of Zambia) is equal to $1.28 (U.S. dollars) per kwacha. However, the kwacha is set a fixed rate equal to $1.25 per kwacha. This means the kwacha exchange rate is ____________. In order to maintain this exchange rate the Zambian government will see _____________ in their stock of international reserves.

A. undervalued; a net decline 

B. undervalued; a net increase 

C. overvalued; a net increase

D. overvalued; a net decline 

Drawing diagram explain the process of crowding out. Also explain why the private sector might find budget deficit detrimental to their business planned projects.