Macroeconomics Answers

Discuss, ‘lack of a diversified production structure, compounded by the absence of complementarity in the productive base of industries are the structural rigidities to economic integration in Southern Africa’

1. How did technology increase U.S. economic growth in the 1990s?
2. Over the past twenty years an economy’s total output has grown from 1000 to 1300, its capital stock has risen from 2500 to 3250, and its labor force has increased from 500 to 575. All measurements are in real terms. Calculate the contributions to economic growth of growth in capital, labor, and productivity: a. assuming that aK = 0.3 and aN = 0.7. b. assuming that aK = 0.5 and aN = 0.5.

Consider a world with only two countries, which are designated the home country (H) and the foreign country (F). Output equals its full-employment level in each country. You are given the following information about each country: Home Country Consumption: CH = 100 + 0.5YH - 500rw Investment: IH = 300 - 500rw Government Purchases: GH = 155 Full-employment Output: YH = 1000 Foreign Country Consumption: CF = 225 + 0.7YF - 600rw Investment: IF = 250 - 200rw Government Purchases: GF = 190 Full-employment Output: YF = 1200 a. Write national saving in the home country and in the foreign country as functions of the world real interest rate rw. b. What is the equilibrium value of the world real interest rate? c. What are the equilibrium values of consumption, national saving, investment, the current account balance, and absorption in each country?

Here are some balance of payments data (without pluses and minuses): Exports of goods, 100 Imports of goods, 125 Service exports, 90 Service imports, 80 Income receipts from abroad, 110 Income payments to foreigners, 150 Increase in home country’s ownership of assets abroad, 160 Increase in foreign ownership of assets in home country, 200 Increase in home reserve assets, 30 Increase in foreign reserve assets, 35 Assuming that unilateral transfers equal zero, find net exports, the current account balance, the capital and financial account balance, the official settlements balance, and the statistical discrepancy. (Note: The increase in home reserve assets of 30 is included in the increase in the home country’s ownership of assets abroad of 160, and the increase in foreign reserve assets of 35 is included in the increase in foreign ownership of assets in the home country of 200.)

Extract C (lines 5–6) states ‘Some economists believe that a reduction in the level of economic activity and an increase in unemployment are inevitable.’ Use the extracts and your knowledge of economics to assess the view that when an economy experiences a negative economic shock there will always be a sustained increase in unemployment.

Statistics such as GDP, the unemployment rate, the rate of inflation, and the trade balance are