Macroeconomics Answers

Suppose you are the manager of a chain of fitness centres. You have just learned that the Government has passed a new law to further enhance healthy lifestyle among the youths. The legislation provides increased subsidies gym operators, as well as tax breaks for parents who spend up till RM1,000 on their children’s gym membership fees. As a result of this legislation, what do you predict will happen to the equilibrium price and quantity of gym membership? Why?

Assume gadgets are sold in a competitive market, the equilibrium price is $6, and the equilibrium quantity is 500 units.

(a) Using the numerical values above, draw a correctly labeled graph of the market for gadgets and show each of the following.

(i) The equilibrium price

(ii) The equilibrium quantity

(b) At a price of $8 per unit, will there be a surplus or a shortage in the market? Explain.

(c) Assume gadgets now become more popular. On your graph in part (a), show the effect of the increase in gadgets' popularity on the equilibrium price and quantity of gadgets.

(d) Assume instead there is an increase in the price of tin, a major input in producing gadgets. What will be the effect of an increase in the price of tin on the market for gadgets?

(e) If both changes in part (c) and part (d) occurred simultaneously, will the equilibrium quantity of gadgets increase, decrease, remain unchanged, or be indeterminate? Explain.

If the number of people classified as unemployed is 20,000 and the number of people classified as employed is 230,000, what is the unemployment rate?

GDP data are criticized as being inaccurate measures of economic welfare because:

If actual inflation is greater than expected inflation, which of the following groups will most certainly benefit?

If actual inflation is greater than expected inflation, which of the following groups will most certainly benefit?

1.Lenders.

2.Recipients of unemployment benefits.

3.Borrowers.

4.Pensioners.