Macroeconomics Answers

consider an economy with only two industries , called Holi Apple company and Spencer juice company. Holi Apple company owns and operate apple groves . It sells some of its apples directly to the public. It sells the rest of its apples to Spencer juice company , which produces and sells apple juice. The following tables shows the transactions of each business during a year

TRANSACTIONS OF HOLI APPLE COMPANY

wages paid to workers $15,000

taxes paid to government $5,000

revenue received from sales of apples $35,000

apples sold to the public $10,000

apples sold to Spencer juice company $25,000

TRANSACTIONS OF SPENCER JUICE COMPANY

wages paid to workers of Spencer juice company $10,000

taxes paid to the government $2,000

apples bought from Holi apple company $25000

revenue received from sale of apple juice $40,000

using the data above , show that the product approach ,income approach and expenditure approach of national income accounting yield that same value of total economic activity(GDP)

1.    The government decides to reduce the interest rates in a bid to boost economic growth through investment. Analysts have argued against this policy citing inflation.

a)    What type of Inflation is this likely to cause. (Justify your reasoning)

Term for businesses do not maximize output from the given inputs

The Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local market to sell gasoline to consumers. Hull and Inverted V are located across the street from each other and can observe the prices posted on each other’s marquees. Demand for gasoline in this market is Q = 90-12P, and both franchises obtain gasoline from their supplier at $3.00 per gallon. On the day that both franchises opened for business, each owner was observed changing the price of gasoline advertised on its marquee more than 10 times; the owner of Hull lowered its price to slightly undercut Inverted V’s price, and the owner of Inverted V lowered its advertised price to beat Hull’s price. Since then, prices appear to have stabilized. Under current conditions, how many gallons of gasoline are sold in the market, and at what price?

Gallons sold: ??

Price $: ??

multiple choice:

a.Price will go down.

b.Price will not change.

c.Price will go up.

Y=A(0.025k-0.5N)N

A=2\3

K=2000

N=-18+(18/5)w

5-c=200+(2/3)(y-T)-300r

6-T=-75+(1/4)Y

I=100-100r

G=100

L=0.5Y-200i

M=6300

π=0.10

What are the values of C, I, L and N

what is the term for when businesses prouduce goods and services that consumers do not want

A principal outsources a work to an agent to deliver y units of output within one month.

(a) Suppose effort is observable. How can the contract be designed so that the agent can be outsourced the first-best level of output?

(b) Now suppose that effort is not observable. Suppose that the agent is risk-averse. Characterize

the contract in this case, clearly

Economics

1. If the !"! > 𝑤 holds at T= L for the person i , and !"! < 𝑤 holds at T= L !"" !""
2. for the person j what you can conclude about the level of market wage for person i and j . Discuss about their labor force participation rates? (5 points) (T: Number of hours available, L: Number of hours spent for leisure)

Q4. What is crowding-out effect? Explain [2 marks]

Q5. a. What is Phillips curve? Draw the short-run Phillips curve and the long-run Phillips curve. Explain why they are different. <b>[2 marks]

b. Suppose the economy is in a long-run equilibrium. Suppose a wave of business pessimism reduces aggregate demand. Show the effect of this shock on your diagram from part (a). If the RBI undertakes expansionary/contractionary monetary policy, can it return the economy to its original inflation rate and original unemployment rate? (b) What is sacrifice ratio? [5 marks]

What will be the rate of interest if money supply increase