Macroeconomics Answers

Answer the following questions about marginal propensity to consume and the multiplier. First provide the correct equation and then show your work to arrive at the answer:

What is the marginal propensity to consume when consumption changes from 7 to 6 and disposable income changes from 5 to 3?

If disposable personal income is 10 and consumption is 12, what is personal savings? What does this mean?

What is the multiplier when the change in equilibrium level of real GDP in the aggregate expenditures model is 9, and change in autonomous aggregate expenditures is 3?

What is the multiplier when the marginal propensity to save is 1/3?

What would happen to the marginal propensity to save when a tax cut was enacted causing the multiplier to change to 5?

Assume the economy of a country is currently operating at short-run equilibrium and producing $500 million in real GDP at a price level of $50. However, the full employment rate of output in Johnsrudia is $300 million. Draw a correctly labeled graph of the AD-AS model that reflects this information. After that tell what happen?

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.

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

Consider the regression output below for the relationship between price (X) and quantity demand for refrigerators in South Africa:

ln(y) = 10.58 — 0.23 ln(x)

𝑅2 = 0.38 N=28

(i) Write the original equation before it was transformed into log form. (2)

(ii) Which assumption is violated in this equation and why? (3)

(iii) What does the b2 coefficient measure in models of this nature? (2)

(iv) Interpret the b2 coefficient in the above equation and state whether it is in line with

economic theory. (3)

(v) Test the hypothesis that b2 =0 at the 5% level of significance. (6)

(vi) Test the hypothesis that 𝑅2 =0 at the 5% level of significance (i.e, F-test). (7)

(vii) Calculate the adjusted 𝑅2 and explain why it is always less than the normal 𝑅2.

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

when deciding on its monetary policy stance?

Macroeconomics book page 500. Essay case "Dinning in dollars in Argentina" three questions.

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?