Macroeconomics Answers

How will each of the following changes in demand and/or supply affect equilibrium price and

equilibrium quantity in a competitive market; that is do price and quantity rise, fall,

remain unchanged, or are the answers indeterminate because they depend on the

magnitudes of the shifts? Use supply and demand diagrams to verify your answers.

Table – 1 shows the fixed cost and variable cost against level of output produced:

Table - 1

Quantity (Units) Fixed Cost (Rs.) Variable Cost (Rs.)

0 100 0

1 100 5

2 100 7

3 100 10

4 100 13

5 100 18

6 100 26

7 100 35

Find Average Fixed Cost, Average Variable Cost, Total Cost, Average Total Cost, and Marginal Cost for level of output. Draw the diagram for the same.

why does the government collect taxes from businesses and households?

Explain equilibrium in goods markets and labour markets?

Suppose that the real GDP increase by R5,000 billion when government expenditure on the construction of new roads increase by R1,500 billion. What is the value of the marginal propensity to consume?

If a country is doing so well in on sector that the performance of that sector is hiding the under performance of all the other sectors. What market failure is it called?

In 1.5 pages, review the fiscal and monetary policy actions adopted by Fiji to address the negative impacts on Inflation, discuss these policies and explain how these policies would address the negative impacts.

In 1.5 pages, review the fiscal and monetary policy actions adopted by Fiji to address the negative impacts on these three macroeconomic variables, discuss these policies and explain how these policies would address the negative impacts.

In what ways might business be affected by large change in interest rates?

Consider the following IS–LM model:

C = 400 + 0.25YD

I = 300 + 0.25Y − 1500i

G = 600

T = 400

(M/P)d = 2Y − 12 000i

M/P = 3000

a. Derive the IS relation. (Hint: You want an equation with Y on the left side and everything else on the right.)

b. Derive the LM relation. (Hint: It will be convenient for later use to rewrite this equation with i on the left side and everything else on the right.)