Macroeconomics Answers

You have agreed to make investment in your friends agricultural farm. This would require an amount of $20,000 as initial investment on your part. Your friend promises you revenue (before expenses) of $3600 per year the first year and thereafter the revenue increases by $200 per year. Your share of the estimated annual expenses is $1000. You are planning to invest for six years. Your friend has made the commitment to buyout your share of the business at that time for $24000. You have decided to set a personal MARR of 15% per year. Judge the profitability of the investment project by using Future Worth (FW) method.

. Beef supplies are sharply reduced because of drought in the beef-raising states, and consumers turn to pork as a substitute for beef. How would you illustrate this change in the beef market in supply-and-demand terms? 

When deciding how much of their income to save vor retirement

 Who has a greater opportunity cost of enjoying leisure, a janitor or a brain surgeon?

Why aggregate demand is determined by money supply in classical model????

South Africa has an unemployment rate of around 32.6% (using the narrow definition) and 43.2% (using the broad definition). Using market supply and market demand curves describe how the market will react to the introduction of statutory minimum wage. Indicate what the likely effect would be on the unemployment situation in South Africa.

Money demand in an economy in which no interest is

paid on money is

Md

p == 500 + 0.2Y - 1000i.

a. Suppose that P = 100, Y = 1000, and i = 0.10. Find

real money demand, nominal money demand, and

velocity.

b. The price level doubles from P = 100 to P = 200.

Find real money demand, nominal money

demand, and velocity.

Suppose the interest rate on a one-year bond today is 

6°/o per year, the interest rate on a one-year bond one 

year from now is expected to be 4°/o per year, and the 

interest rate on a one-year bond two years from now is 

expected to be 3°/o per year. The term premium on a 

two-year bond is 0.5°/o per year and the term premium 

on a three-year bond is 1.0°/o per year. In equilibrium, 

what is the interest rate today on a two-year bond? On 

a three-year bond? What is the shape of the yield 

curve?

Consider the economy with the following data

𝐶 = 200 + 0.25(𝑌 − 𝑇)

𝐼 = 150 + 0.25𝑌 − 1000𝑟

𝐺 = 250

𝑇 = 200

(𝑀⁄𝑃)

= 2𝑌 − 100𝑟

𝑀 = 3200,

𝑃 = 2

a. Mathematically derive the IS-curve

b. Mathematically derive the LM-curve

c. Solve for the equilibrium income (Y) and interest rate (r)

d. Calculate the value of consumption (C) at the equilibrium level

e. Analyze effect that a monetary expansion will have on the equilibrium values for Output, Interest Rate, Consumption and Investment in the model.

Explain how the inadequate aggregate demand has affected the output of pakistan during lockdown period?