Macroeconomics Answers

Suppose that Switzerland can produce either 18 tons of chocolate or 9 tons of biscuit on a year while Norway can produce either 16 tons of chocolate or 4 tons of biscuits in a year. Which country has the absolute advantage

what will happen to the rand/dollar exchange rate and the equilibrium quantity of dollars if South African exportsbto the united states increase

Use again the model from Chapter 3 to answer this multiple choice problem.  If the household's initial asset position is positive, B∗0>0, then the initial endowment (Q₁,Q₂) is located ______________________ the intertemporal budget constraint (IBC) and this in turn implies that it is ______________________ for the household to consume its endowment in each period; C₁=Q₁ and C₂=Q2.

(a) above; feasible (affordable)

(b) above; not feasible (not affordable)

(c) below; feasible (affordable)

(d) below; not feasible (not affordable)

(e) None of the above

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

Prior to the COVID-19 pandemic, South Africa’s national income was

reported at R3 billion, and in 2021, owing to restrictions implemented to ease the spread of infections, national income reduced to R1.5 billion. Assume that the marginal propensity to save equals 0.3. a) By how much should government spending be increased to bring output/or income to its pre- pandemic levels? [7 marks b) is your answer greater, or less, than the change in income and why? [3 marks]

2.3. 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]

2.4. 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 (∆𝐺), 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?