Macroeconomics Answers

Which of the following statements is/are correct?

1. Ceteris paribus, as the real wage rate increases, the quantity of labour demanded increases. 
2. An increase in the working age population results in an increase in the supply of labour. 
3. A change in the real wage rate brings a movement along the labour supply curve. 
4. The demand for labour is determined by the diminishing returns to labour.

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

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

Only (i) and (iii) are correct.

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

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.

• Only (i) and (iii) are correct.

• Only (i) is correct.

• Only (ii) and (iii) are correct.

• Only (ii) is correct.

A decrease in the supply of labour results in:

• an increase in the real wage rate and no change in potential GDP.

• a decrease in the real wage rate and an increase in potential GDP.

• an increase in the real wage rate and a decrease in potential GDP.

• 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?

• 17.5

• 160

• 280

• 10

An increase in the productivity of labour will lead to:

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

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

• an upward shift of the aggregate production function but no movement along it.

• a downward shift of the aggregate production function but no movement along it.

Assume that a representative consumer has consumption good and leisure in the consumption bundle. Both consumption good and leisure are normal goods. If the consumer’s real wage increases, holding everything else constant, explain in your own words what would be the effects on consumption and labour supply. Provide your explanation in terms of income and substitution effects under a static equilibrium model. [

Suppose that an unanticipated shock has hit the economy, causing the price level to be higher than its equilibrium level in the goods market. Assume that the interest rate is higher than its equilibrium level. With the use of diagrams, explain in your own words the effects of the unanticipated shock on the price level and output, assuming that fiscal policy is used to stabilize the economy. 

In the context of Money Surprise Model, suppose that there was an unanticipated increase in the money supply. With the use of diagrams, explain in your own words the effects of the sudden increase in money supply on employment, the real wage, output, real interest rate, demand for money and the price level.

(a). Graph the percentage change in GDP per capita (constant 2010 US$) for Malaysia, Vietnam, and Thailand over the period 2005 to 2019. (i). Using a chart, compare the performance of the selected countries based on the percentage changes in GDP per capita over the period 2005 to 2009. (ii) Briefly explain in your own words the possible causes of the sharp drop in GDP per capita in 2011, 2013-2014, and 2008-2009 for at least one selected country. (iii). Explain in your own words why the trends in GDP per capita over the periods differ for the selected countries. Answer this question using the World Bank World Development Indicators database, accessible at https://databank.worldbank.org/source/world-development-indicators#. Note: Report a table containing the percentage changes for each year from 2006 onwards. Words and numbers in the reported table are excluded from the word count.