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If capital stock of a nation rises, what will be its effect on output, employment and the
real wage? Explain in the context of Classical model using diagrams.
How is each of the following likely to be affected by an inflation: the natural unemployment rate, the cyclical unemployment rate, the political system, and the poll ratings of the president? Explain.
How would increased political instability in a country likely affect capital inflows, the domestic real interest rate, and investment in new capital goods? Show graphically and explain.
You are given the following schedule for the production of pens by a firm
Labor Total Product
0 0
1 20
2 50
3 70
4 80
5 85
6 82
If pen sells for Rs 3 per unit and workers can be hired in a competitive labor market for Rs30
per day, how many workers should be hired? Explain your answers clearly.
Investment 200 220
Saving 180 190
Export 100 110
Imports 120 140
Government Expenditure 150 160
Taxation 150 160
Equilibrium National Income 1 800 2 000
(a) Calculate the value of the multiplier for this economy.
(b) Should the full employment level of income be R-B2 255, by how much should government change its spending to reach this level of income during the next year given the multiplier has not changed.
(c) Evaluate whether or not this policy approach is effective in real life in achieving the desired level of GDP.
Term when business produce goods and services that consumers do not want
#340153 on Dec 2023