Macroeconomics Answers

Classify the following topics as relating to microeconomics or macroeconomics. a. a familys 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 firms decision about how many workers to hire e. the relationship between the inflation rate and changes in the quantity of money

An economy consists of three workers: Larry, Moe, and Curly. Each works 10 hours a day and can produce two services: mowing lawns and washing cars. In an hour, Larry can either mow one lawn or wash one car; Moe can either mow one lawn or wash two cars; and Curly can either mow two lawns or wash one car. a. Calculate how much of each service is produced under the following circumstances, which we label A, B, C, and D: All three spend all their time mowing lawns. (A) All three spend all their time washing cars. (B) All three spend half their time on each activity. (C) Larry spends half his time on each activity, while Moe only washes cars and Curly only mows lawns. (D)

b. Graph the production possibilities frontier for this economy. Using your answers to part a, identify points A, B, C, and D on your graph. c. Explain why the production possibilities frontier has the shape it does. d. Are any of the allocations calculated in part a inefficient? Explain.

Explain the concepts of Price Elasticity of Demand, Income Elasticity of

Demand and Cross-Elasticity of Demand. (10 marks)

(b) To what extent are these concepts useful to:- managers of shopping malls, and a government (20 marks)

3. Discuss the effectiveness of fiscal and monetary policies in regulating economic

1. (a) The demand (D) and supply (S) equations for a commodity (X) are given by:-

D = 2000 – 20P

S = -500 + 30P, where P = Price (R) per unit

(i) Find the equilibrium price and quantity and show on a suitable diagram. (4 marks)

(ii) Calculate Price Elasticity of Demand (PED) when price rises from R20 to R80. (2 marks)

(iii) A specific sales tax of R30 per unit is imposed on the good. Explain and illustrate the changes to part (i). (3 marks)

(iv) Comment on the burden of the tax. (3 marks)

(b) Discuss the factors affecting: demand for, and supply of a good (18 marks

1.      What is the core discussion of the Keynesian cross?

2.      Why are actual and planned expenditure simultaneously analysed?

3.      Why is the multiplier effect taken into consideration in the Keynesian cross?

4.      How does the Keynesian cross model, explains, the functions of Fiscal policy?

5.      Why are MPC and the ΔG critical variables in the multiplier effect?

explain       C = 15 + 0.6Yd  

Explain the association of the following diagram (hints: the association has directions; from sales order to customers, and from customers to sales orders)?

What is segregation of duties and why internal controls need segregation of duties?

1. You are asked to advice government on a policy consideration. The policy being considered is in effect looking to ban the importation of chicken into the country. 

Present a paper on your advice on this policy action.

Your paper should reflect: 

1. Intended and untended consequences of this policy action
2. Necessary integrations in other sectors necessary for this policy implementation
3. Short run and long run impact on economic growth, unemployment, inflation and BOP

How is the short run difined in production theory and how does it differ from the long run?

Suppose "x" nation has a closed economy and nation "y" has an open economy , how could these nations determine the amount of spending ?