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In the market for Fante Kenley, the supply and demand functions respectively are
and
When there is excess demand, price adjusts according to the equation
Find the long run equilibrium price, P* (that is, the price at which there is no excess demand or supply).
Formulate and solve he first order differential equation giving P as a function of time, t. Is this market dynamically stable or unstable?
If the initial price is P = 50, how close will the price be to its long run equilibrium value, when t = 10?
If the supply and demand functions are given by and, respectively, find the equilibrium price and quantity, and calculate the consumer’s and producer’s surplus.
Suppose that the net investment flow is described by the equation I(t)=3t1/2 and that the initial capital stock, at time t = 0, is K(0). What is the time path of capital K?
If net investment is a constant flow at I(t)=1000 (Ghana Cedis per year), what will be the total net investment (capital formation) during a year, from t = 0 to t = 1?
If I(t)=3t1/2 (thousands of Ghana Cedis per year) – a nonconstant flow – what will be the capital formation during the time interval [1, 4], that is, during the second, third, and fourth years?
i) Show that the Cobb-Douglas production
Q=AKαL1-α
where Q is total output, K is capital stock, L is labour stock and A and are positive constants, exhibit constant returns to scale.
(ii) What returns to scale does Q=5K0.25L0.6 exhibit?
A. Now, assuming the economy is open with government (G) participation and external trade which is summarized as follows; export(X)= 100-0.10Y, import(M)=50, G=100, Taxes(T)= 100 and C, I, MS, Mt, Mz= speculative money demand
What exchange rate policy should government implement in (iii) to enhance income and why?
A. Now, assuming the economy is open with government (G) participation and external trade which is summarized as follows; export(X)= 100-0.10Y, import(M)=50, G=100, Taxes(T)= 100 and C, I, MS, Mt, and Mz the same as defined in (a) above. Calculate;
i. The equilibrium income and interest rate in this new economy.
ii. The level of C, I, Mt, and Mz when the economy is in equilibrium
A. Given that in an economy, , I , MS =300, Mt = 0.4Y, and Mz=125-200r where, Y= income, C= consumption, I= investment, MS= money supply, Mt= transactional-precautionary money demand, Mz= speculative money demand and r= interest rate. Calculate;
i. The equilibrium level of income and interest rate in this economy. (2 marks)
ii. The level of C, I, Mt, and Mz when the economy is in equilibrium
Discuss whether government intervention in the economy is ever justified by the implementation of measures to fight against COVID-19 pandemic in Ghana
With the aid of diagrams, brieftly explain the effectiveness of fiscal and monetary policy under fixed exchange rate system with perfect capital mobility within the IS-LM-BOP framework
1. The equilibrium level of income and interest rate in this economy.
2. The level of C, I, Mt, and Mz when the economy is in equilibrium.
Now, assuming the economy is open with government (G) participation and external trade which is summarized as follows; export(X)= 100-0.10Y, import(M)=50, G=100, Taxes(T)= 100 and C, I, MS, Mt, and Mz the same as defined in (a) above.
Calculate;
1. The equilibrium income and interest rate in this new economy.
2. The level of C, I, Mt, and Mz when the economy is in equilibrium.
3. Assuming capital is perfectly mobile in this economy, graphically sketch the IS-LM-BOP frame work of this economy. Comment on the balance of payment situation in this economy.
With the aid of a diagrams, briefly explain how interest elasticities and demand for money affect the slope of the IS and the LM curve
