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Distinguish between voluntary and involuntary unemployment. Do
you consider the former a social problem requiring public policy?
Discuss the role of minority policy to eliminate unemployment?
Q.1 Explain if the interest elasticity of investment demand is zero. What
will be the resulting slop of IS schedule?
4.4 The monetary policy transmission mechanism shows the relationship between __________. [1] the interest rate and spending by firms [2] the interest rate and spending by government and households [3] the total income and investment expenditure [4] the price level and total production
Show from national income accounting that
a.
An increase in taxes (while transfers remain constant) must imply a change in net
exports, government purchases, or the saving-investment balance.
b.
An increase in disposable personal income must imply an increase in consumption or an
increase in saving.
c.
An increase in both consumption and saving must imply an increase in disposable
income.
[ For both parts b and c assume there are no interest payments by households or transfer pay
ments to foreigners.]
Consider a hypothetical economy characterized by the following behavioral equations.
IS: LM:
C=400-200r+0.2Y Md=Y-1000r
I= 240-400r Ms=800
G=200 P=2
a)derive the equations of the IS and LM curves of the economy
b) Find the equilibrium income level and the interest rate
Suppose Rawanda is a conflict zone & due to civil war its Labor start's moving out of the count Considering the LRAS reflect the effect on Labor Market and other macroeconomic Variable. Draw the Graph of other macroeconomics variable Labor MKT (Graph)Exchange rate (Graph)With Labeling
We call the model of income determination developed in this chapter a keinsien one . What nakes it keinsien as apposed to classical one ?
Explain whether each of the following events shifts the short-run aggregate supply curve, the aggregate demand curve, both or neither. For each event that does shift a curve, draw a diagram to illustrate the effect on the economy.
a) Households decide to save a larger share of their income.
b) Sri Lankan farmers suffer a prolonged period of unfavorable weather conditions for agriculture.
c) Increased job opportunities overseas cause many people to leave the country.
Explain whether each of the following events shifts the short-run aggregate supply curve, the aggregate demand curve, both or neither. For each event that does shift a curve, draw a diagram to illustrate the effect on the economy.
a) Households decide to save a larger share of their income.
b) Sri Lankan farmers suffer a prolonged period of unfavorable weather conditions for agriculture.
c) Increased job opportunities overseas cause many people to leave the country.
