Macroeconomics Answers

Suppose the bank of Ghana purchases Ghc 180 million worth of Government of Ghana bonds to the public. ( a) With the aid of money market diagrams, explain how the money market will be affected.

(b) Explain what will happen to the interest and show why the change in the interest rate will restore the money market back to equilibrium

(c) Use the Keynesian Cross diagram to illustrate and explain how the goods market will be affected by this monetary policy.

(d) Using your answer in part (iii) above can you conclude that the above monetary policy is contractionary? Explain.

Consider a small economy where the total population is 20,000. The size of the labour force is 10,000, while the number of people employed is 7,000. The unemployment rate in this economy is 15%. (2 marks) N d) In 2017 the GDP of Ghana in current prices was GHC 205914 million, while the GDP in constant price was GHC 39175.04 million. The GDP-deflator for 2017 is therefore is 425.63 %. 

(a) what are inflationary and deflationary gap? use money and goods market diagrams to illustrate how fiscal policy can be used to close an inflationary gap (b) Suppose that you are the governor of Bank of Ghana. The economy is experiencing a sharp and prolonged inflationary trend. i. What change in (a) open market operations, and (b) required reserve ratio would you consider? ii. Explain in each case how the change you advocate would affect the money market and the goods market. Use appropriate diagrams.

How does crowding out create questions about the effectiveness of expansionary demand-side fiscal policy? Give an

example.

you are provided with the following information economy

Y=C+I+G+X-M

C=200+0.8Y^d

I₀=500

G₀=500

X₀=100

M=50+0.4Y

using the data provided demonstrate that multiplier for open economy is smaller than the multiplier for closed economy

based on relationship between consumption expenditure and income, there is fundamental difference between Keynesian consumption model and the two models that are based on the Fischer intertemporal choice model. what is the difference?

both life cycle and permanent income hypothesis rely on Fischer's intertemporal choice model estimating present value of income. however both make different assumptions about the present value of income. explain

Classify the following topics as relating to microeconomics or macroeconomics. a. a family’s decision about how much income to save b. the effect of government regulations on auto emissions c. the impact of higher national saving on economic growth d. a firm’s decision about how many workers to hire e. the relationship between the inflation rate and changes in the quantity of money

main factors that may have an effect on real consumption by households in the economy.