Macroeconomics Answers

Using a suitable example, explain how currency as the unit-of-account can lead to undesirable costs.

Explain with a diagram how a decrease in human capital can lead to detrimental results for economic growth (holding physical capital and technological progress constant)?

Real money demand is

It) = 02Y – 5001

Where Y is real income and i is the nominal interest rate.

The economy has a fixed real output Y= 1,000.

Assume further that the central bank maintains a constant money growth rate to have a constant inflation rate and a fixed real interest rate of r= 0.04

1. Draw the graph with real seigniorage revenue on the vertical axis and inflation on the horizontal axis. Show the values of seigniorage for inflation rates of 0; 0.04; 0.18 and 0.3 in the graph.

2. Solve for the inflation rate that maximizes seigniorage revenue. What is the maximum

amount of seigniorage revenue? 3. Repeat part 1 and 2 for Y 1,000 but r= 0.08

C=260+0.75y I=320 G=300

1) Determine the equilibrium level of income using expenditure and injection leakage.

2) calculate the value of multiplier of economy

3) Calculate the equilibrium level of income when there is a decrease in investment from 320 to 300 using expenditure and injection leakage approach

2 page summary on the impact of Covid 19 on inflation in Fiji

Discuss the savings and portfolio decisions and employ empirical evidence to

back and/or refute its claims.

. Suppose that consumption depends on the interest rate. How, if at all, does this alter the conclusions reached in the chapter about the impact of an increase in government purchases on investment, consumption, national saving, and the interest rate?

• Consider an economy described as follows: Y 5 C 1 I 1 G. Y 5 8,000. G 5 2,500. T 5 2,000. C 5 1000 1 2/3(Y2T ). I 5 1,200 2 100r. a. In this economy, compute private saving, public saving, and national saving. b. Find the equilibrium interest rate. c. Now suppose that G is reduced by 500. Compute private saving, public saving, and national saving. d. Find the new equilibrium interest rate

Consider the following scenarios, state and explain the type of inflation it is associated with.

i. If inflation increases because of the large increase in the price of oil.

ii. If inflation increases after a large increase in government spending.

State whether the slope of the LM and IS curve is negative or positive ,support your answer