Macroeconomics Answers

Which of the following statements is/are correct?

(i) Ceteris paribus, as the real wage rate increases, the quantity of labour demanded 

increases. 

(ii) An increase in the working age population results in an increase in the supply of labour. 

(iii) A change in the real wage rate brings a movement along the labour supply curve. 

(iv) The demand for labour is determined by the diminishing returns to labour.

A. Only (i), (ii) and (iv) are correct. 

B. Only (ii), (iii) and (iv) are correct. 

C. Only (i) and (iii) are correct. 

D. Only (i), (iii) and (iv) are correct.

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

Define consumption also list and explain components of

consumption function. 

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