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C= 0.8(1 - t )Y
T=0.25
I=900-50i
-G=800
L = 0.25Y-62.5i
-M/-P= 500
a. What is the value of aG which corresponds to the simple multiplier (with taxes) of Chapter 10 ?
b. By how much does an increase in government spending of ∆G increase the level of Income in this model, which includes the money market?
c. By how much does a change in government spending of ∆G affect the equilibrium Interest rate?
d. Explain the difference between your answers to parts a and b.
marks each)
Item Quantity
(2012)
Price
(2012)
Price
(2013)
Oranges 50 $0.90 $0.75
Bananas 100 $0.50 $0.95
Chicken 200 $2.00 $2.50
Beef 100 $5.00 $4.80
Bread 300 $1.75 $2.00
a) What is the cost of the CPI basket in 2012?
b) What is the cost of the CPI basket in 2013?
c) What is the CPI for 2012?
d) What is the CPI for 2013?
Question 1 (15 marks)
There was a discovery of the new species of Homo Naledi in South Africa in the year 2017. This resulted in an increase in international tourists visiting South Africa. 1.1 Use a foreign exchange diagram to illustrate and explain the effect of this discovery on the rand–dollar exchange rate, ceteris paribus. (10)
1.2 Explain how your result in Question 1.1 could have affected import prices and inflation in South Africa. (5)
Given the following information for country A:
Details RM (Million)
Consumers consumption
30
Net investment
20
Government expenditure
30
Export
20
Import
10
Depreciation
10
Indirect taxes
25
Subsidies
118
a) Calculate Gross Domestic Product for country A. (4 marks)
Consumption
Government Purchases
National Saving
Investment
Labor force
Unemployed
Region
April 2013
April 2014
April 2013
April 2014
Northeast
28,407,200
28,288,900
2,174,400
1,781,300
South
56,787,800
57,016,400
4,089,900
3,363,800
Midwest
34,320,000
34,467,000
2,473,700
2,109,000
West
36,122,200
36,307,300
2,940,800
2,535,700
Calculate the number of workers employed in each of the regions in April 2014.
Number of workers employed in Northeast region in April 2014
Number of workers employed in South region in April 2014
Number of workers employed in Midwest region in April 2014
Number of workers employed in West region in April 2014
What’s scarcity
Question 1. Agree or disagree? (40 points) 1 Do you agree or disagree? Explain your answers.
(a) In the Real Business Cycle model, wages correlate perfectly with labour productivity. (b) If the Blanchard-Kahn conditions are violated, then there is no stable equilibrium.
(c) In a model with risk-averse agents and constant consumption growth, there is no equity premium, according to the equity premium formula derived by Mehra and Prescott. (d) The Diamond-Mortensen-Pissarides model is consistent with constant wages, even when there are shocks.
(e) The Frisch elasticity of labour supply captures only the substitution effect of a wage change.
(f) The Kaldor growth facts imply that, on average, wages grow at the same rate as labour productivity.
With specific reference to the current state in Kenya as at 30th June 2021, discuss the macroeconomics state of Kenya in relation to inflation and interest rates and how the same has affected the operations of the economy
Why is there a trade-off between the amount of consumption that people can enjoy today and the amount of consumption that they can enjoy in the future? How does saving relate to consumption and
thus to economic growth? Why is the financial sector important in macroeconomics debates?
#339914 on Dec 2023