Macroeconomics Answers

and i as a percentage; a 5 percent interest rate implies i = 5) 

C = 0.8 (1 – t) Y

t = 0.25

I = 900 – 50i

G = 800

L = 0.25Y – 62.5.i

M / P = 500

a. What is the value of the simple multiplier (with taxes)

b. By how much does an increase in government spending of ∆G increase the level of income in this model, which includes the money market?

c. By how much does a change in government spending of ∆G affect the equilibrium interest rate?

Use the behavioural equations below and answer the questions that follow:

C = R4 billion + c₁Y_D = R19.7 billion

Y= R13.1 billion

T= R6 billion

c₀ = R13.5 billion

i.                   Calculate the propensity to consume.                                                                 (4)

In the last century, Tunisia’s Gross Domestic Product (GDP) has grown rapidly

on average 5% per annum. However, as a result of the political, economic and geopolitical turmoil faced, the economic situation of the country has been affected since 2009. GDP per capita in 2009 was USD4130. While in 2017, GDP per capita Tunisia is USD3491.

In a situation that remains the same, how many years will Tunisia be able to

doubling the per capita GDP achieved in 2009?

Suppose that an individual invests $2,500 at the end of each of the next 6 years and

earns an annual interest rate of 8%. Calculate the present value of this series of annuity payments

B)Suppose that an individual invests $2,500 at the beginning of each of the next 6 years and

earns an annual interest rate of 8%. Calculate the value of this series of annuity payments. How

does this result compare with the solution to Part A?

Explain that fiscal policy is less effective than monetary policy in a situation when investment is very interest elastic and money demand is very interest inelastic

For a single model of the expenditure sector with government and income taxes, derive the expenditure multiplier and explain how it changes as the marginal propensity to save increases.

Develop a qualitative analysis on income, interest rate, trade balance and private consumption using the IS-LM-BP model if the Fiji dollar was devalued. Assume perfect capital mobility. Carefully discuss the adjustment processes.

Q1.

A labor force survey for UG Ll 00 economy suggests that the total number of employed are

11 million, with an unemployment rate of 5.5 %. If the labor force participation rate is 62%,

calculate

i. Unemployment rate

ii. Labor Force

iii. Assume that there are 20,000 discouraged workers, how will the unemployment rate

change.

iv.

Assume instead, there are 20,000 dishonest workers, how will the unemployment rate

change.

For any developing country, analyze its exchange rate system and all recent developments in its exchange rate policies. Use these to answer the following questions in your writing: 

Question: Discuss in the context of any one of the South Pacific Island countries the following: Use data analysis and or graphs where applicable.