Macroeconomics Answers

An increase in the productivity of labour will lead to:

A. An upward shift of the aggregate production function but no movement along it.

B. An downward shift of the aggregate production function but no movement along it.

C. a movement along the aggregate production function but no shift in it.

D. both a movement along and an upward shift in the aggregate production function.

use an illustrative diagram to show and explain how the natural rate of unemployment is affected by an increase in unemployment benefits

use illustrative diagrams to explain the effects of a monetary contraction on output, composition of output, interest rate, and on the exchange rate under the flexible exchange rate system

a) The Covid-19 pandemic as well as Brexit has severely disrupted worldwide supply chains. This disruption has forced many domestic producers to source essential inputs from local, more expensive suppliers instead of foreign, cheaper ones.

(i) Discuss, and illustrate (using the WS-PS model and Phillips Curve model) how this supply shock is likely to impact the labour market and inflation expectations moving forward. (6)

(ii) Provide an example of a supply-side policy that you think government could pursue in an attempt to reduce these supply-side impacts from Covid and Brexit. (4)

(a) According to John Keynes liquidity preference depends on three motives. Explain.  [15 marks]

Suppose the economy is operating at equilibrium, with Y0 5 1,000. If the government undertakes a fiscal change whereby the tax rate, t , increases by .05 and government spending increases by 50, will the budget surplus go up or down? Why?

Using suitable graphs, briefly explain the behavior and basic characteristics of following oligopoly models

a) Sweezy oligopoly model

b) Cournot oligopoly model

c) Stackelberg oligopoly model

d) Bertrand oligopoly model

Provide a real -world example of a market that approximates each oligopoly setting, and explain your reasoning

e) Cournot oligopoly model

f) Stackelberg oligopoly model

g) Bertrand oligopoly model

List some empirical examples to support each theory which explains why the short-run aggregate supply curve is upward sloping.