Macroeconomics Answers

Md=25y-80r,Ms=2400, p=2

a)       Find equilibrium output equation. And Y* when r=12%

b)     Find LM curve equation

c)      Find slope of LM curve.

d)     MS increased to 3000

3. Find equilibrium r

4. Find equilibrium y

In the simplest possible Keynesian macroeconomic model …

a. government is important in distributing social grants.

b. households consume products sold in the goods market.

c. the labour market plays an important role.

d. social grants help people have income to spend on consumption goods like taxi rides.

e. wages are flexible.

countries with high fertility levels face serious problems, how does it fit into the solow growth model?

Germany has a high technology level, because of high investment in education, a national culture of long education, strong protection of property rights, and an open economy. It has a high growth rate if capital per worker, despite a lack of natural resources. In contrast

7.Countries engage in international trade because factors of production are unequally distributed among economies of the world.

a. False

b. True

8.The following factors contributed to South Africa being downgraded to junk status in 2017.

a)Debt incurred by stated-owned entities such as Eskom.

b)Corruption and increased public debt.

c)Lack of clarity regarding economic policy.

d)High economic growth.

a. only b

b. a, b and c

c. only d

d. c and d

According to milton frideman," the stability in the demand for money is just a behaivioural fact." Examine this statement with emperical evidence.

A small and open country is described using the following two equations:

Y = C Y – T) + I (r* ) + G – N X(e) -------------------------------1

M/P = L(r*, Y) ------------------------------------------------------------------------------2

a. If the country described above suffers from a recession, should the state government use

monetary or fiscal policy to stimulate employment? Why? (8 Marks)

Use the Mundell-Fleming model to answer the following questions about France.

a) If France suffers from a recession, should the state government use monetary or fiscal policy to stimulate employment?

b) If France prohibited the import of wines from Ukrain , what would happen to income, the exchange rate, and the trade balance? Consider both the short-run impacts

Using the theory of liquidity preference, explain why an increase in the money supply

lowers the interest rate. What does this explanation assume about the price level? (5

marks)

What factors will cause shift in money demand