Macroeconomics Answers

Use a diagram to explain the three main characteristics of the consumption

function.

State the three possible relationships between production, income and

spending in macroeconomic theory.

If income increases from R1500 to R2000 and the marginal propensity to consume is 0.8, the new level of consumption will be?

COVID-19 adversely affected both our health and economic prospects, which in turn affected the behavior of economic agents—firms and households. Therefore, agents resorted to the ‘wait and see’ approach, which means postponing consumption and investment due to increased uncertainty. a) what impact this change in behavior had on employment and output? b) what effect did it have on the aggregate demand? [Use diagrams to illustrate your responses]. [10 marks

explain what would happen to the rand/dollar exchange rate and the equilibrium quantity of dollars if south african exports to the united states increase

Explain, with the aid of a graph, what will happen to the rand/dollar exchange rate and the equilibrium quantity of dollars if South African exports to the United States increase

IF the marginal propensity to consume is 80 percent, an increase in the national income of R100 billion would

Explain, with the aid of a graph, what will happen to the rand/dollar exchange rate and the equilibrium quantity of dollars if South African exports to the United States increase.

(Hint: In your answer, also comment on the effect on the current account of the balance of payments as well as on the level of domestic prices.)

A stimulus package worth R500 billion was designed and by government of South Africa in 202 to keep businesses and households afloat. If the marginal propensity to consume equals 0.75, and R500 billion equals to the change in government spending (∆�), how does change in government affected output and employment? [7 marks] Do you think the size of the multiplier is justifiable in the context of South Africa? [3 marks].