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The relationship between the change of real output and the unemployment rate in the US economy was examined by Arthur M. Okun (1928-1980). How was the theory of business cycle placing an important position in his work? Elaborate
How the Phillips Curve is related to the model of Aggregate Demand and Aggregate Supply. Explain using appropriate diagrams.
a. lower mark-up.
b. higher mark-up.
c. lower unemployment rate.
d. higher unemployment rate.
1. a and c
2. a and d
3. b and c
4. b and d
5. Only b
1. In an open economy, the impact of an increase in the interest rate on the demand for goods
and the level of output in the goods market can be illustrated by the following chain of events:
1. i↑ → E↓ → X↑ → NX↓
2. i↑ → E↑ → X↓ → Z↓ → Y↓
3. E↓ → X↑ → NX↑ → Z↑ → Y↑
4. i↑ → I↓ → Z↑ → Y↑ → NX↓
1. a higher domestic interest rate leads to a depreciation of the nominal exchange rate.
2. a higher domestic interest rate leads to an appreciation of the nominal exchange rate.
3. the domestic interest rate has no impact on the nominal exchange rate.
4. a depreciation of the nominal exchange rate leads to a lower domestic interest rate.
5. an appreciation of the nominal exchange rate leads to a higher domestic interest rate.
Consider the following voting game. There are three players, 1, 2 and 3. And there are three alternatives: A, B and C. Players vote simultaneously for an alternative. Abstaining is not allowed. Thus, the strategy space for each player is {A, B, C}. The alternative with the most votes wins. If no alternative receives a majority, then alternative A is selected. Denote ui(d) the utility obtained by player i if alternave d � {A, B, C} is selected. The payoff functions are,
u1 (A) = u2 (B) = u3 (C) = 2
u1 (B) = u2 (C) = u3 (A) = 1
u1 (C) = u2 (A) = u3 (B) = 0
a. Let us denote by (i, j, k) a profile of pure strategies where player 1’s strategy is (to vote for) i, player 2’s strategy is j and player 3’s strategy is k. Show that the pure strategy profiles (A,A,A) and (A,B,A) are both Nash equilibria.
b. Is (A,A,B) a Nash equilibrium? Comment.
How does an increase in the tax rate affect the IS curve?
b.
How does the increase affect the equilibrium level of income?
c.
How does the increase affect the equilibrium interest rate?
We call the model of income determination developed in this chapter a Keynesian one. What
makes it Keynesian, as opposed to classical?
Number of Workers2. A certain number of salesmen were appointed in different territories and the following datawere compiled from their sales reports. Calculate the central tendencies (mean, median, mode)for sales from the following data. Comment on the shape of the dataset. Which central tendencyvalue is best suited for the data?Sales (^ * 000 Rs.) : 4-8 8-12 20 - 24 28-32 32-36 36 - 40 No. of salesmen : 11 13 16 14 - 9 17 6 4
a) A hypothetical closed economy has a national income model of the form Y = C + I + G where:
C = 30 + 0.75Y; and private investment (I) = 70; and government spending (G) = 150 Compute the equilibrium level of national income for this economy
#339914 on Dec 2023