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Consider the following information (amounts in Kshs. Billions)
C = 30 + 0.75Y
R = 20
T = 0.4Y
Z = 65
G = 45
Determine:
a) Equilibrium National Income (6 Marks)
b) Government deficit/surplus (7 Marks)
c) Additional government expenditure required to raise equilibrium national income by Kshs. 50 billion. (7 Marks)
In the economy of Brightland, the commercial banks have deposits of $600 billion. Their reserves are $60 billion. All reserves are in deposits with the Central Bank and the commercial banks hold no excess reserves. There is $120 billion in Central Bank notes outside the banks, and there are no coins.
(10 marks)
C = 50 + 0.7 Yd (Yd = Y-T) (Consumption & Expend)
I = 100
(Investment Expend)
X = 20
(Exports )
M = 10 – 0.27
(Imports)
T=25 interepret the consumption Function
ii)
Determine Equilibrium level of National Income
iii)
Consumption level at Equilibrium level of Income
iv)
Total import at equilibrium Income
v
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.
3. A decrease in the supply of labour results in:
A. an increase in the real wage rate and a decrease in potential GDP.
B. a decrease in the real wage rate and an increase in potential GDP.
C. an increase in the real wage rate and no change in potential GDP.
D. a decrease in the real wage rate and no change in potential GDP.
How many years will it take for GDP to double from R40 billion to R80 billion if the growth rate is
0.25% per year in South Africa?
A. 17.5
B. 10
C. 280
D. 160
4. The supply of labour function is upward sloping because as the real wage rate increases:
(i) the opportunity cost of working increases.
(ii) the opportunity cost of leisure increases.
(iii) diminishing marginal product of labour occurs.
A. Only (i) is correct.
B. Only (ii) is correct.
C. Only (i) and (iii) is correct.
D. Only (ii) and (iii) are correct.
Draw diagram of a typical IS-LMmodel and indicate the changes in all the variables on the diagram should there be an increase in aggregate expenditure causing a shift of the IS curve to the right ( indicate the shift in the IS curve on your diagram) Indicate where macroequilibrium will be and properly label the axes on the diagram. Briefly explain what you understand such an IS-LM model is actually reflecting in terms of macroeconomics
1. List and discuss main reasons that cause aggregate demand (AD) curve to have a negative slope. Indicate the consequent effects that each of these reasons will have on other relevant microeconomics variables.
2.Discuss in detail how actual tender process works in terms of issuing the TBs and repayment agreement.
3. In the initial stages of the ongoing coronavirus pandemic an expansionary economic policy was adopted by government to assist South African economy.Discuss the purpose and objectives of expansionary monetary policy in the economy. Further indicate which instruments are generally used to achieve the purpose of expansionary monetary policy and how they are adjusted.
