Macroeconomics Answers

If the marginal income is $5,000 and the marginal propensity to save is 0.30, savings is:

A. $90

B. $1,590

C. $3,500

D. $1,500

E. None of the above

If the level of government spending were to decrease by 100 units in the IS – LM schedule

 model, how would this affect the position of the IS schedule? In which direction would the

 schedule shift, and by how many units?

What are the endogenous and exogenous variables?

Is collusion possible in the Aerospace and Defence manufacturing industry in South Africa?

Explain how each of the following developments would affect the supply of money, the demand

for money, and the interest rate. Illustrate your answers with diagrams.

Consider a hypothesis economy described by the following equation

C=100

I=1200

X-1110

M=200+0.25Y

T=250+0.3Y

Required

1.Compute the equilibrium level of the national income

2.The level of consumption income after tax and net exports that corresponds to the equilibrium level

national income

Explain how the interest rate works in the classical system to stabilize aggregate demand in the face of autonomous changes in components of aggregate demand such as investment or government spending

1.

a) If the level of government spending were to decrease by 100 units in the IS – LM schedule

 model, how would this affect the position of the IS schedule?

b) In which direction would the

 schedule shift, and by how many units? ( 1+3=4 marks)

How can an oligopoly cause market failure

a) Consider a small open classical economy. Use an appropriate model and graph to 

explain in detail what happens to the real exchange rate if the Government: 

i. Engaged in expansionary fiscal policy 

ii. Engaged in contractionary fiscal policy