Macroeconomics Answers

In the islm model suppose the demand for investment became less responsive to change in roi what will be the impact on effectiveness of fiscal policy

Explain the cost of unexpected inflation

Derive the demand for money using money demand and Money supply curve show how releif of interest with a decrease in money supply

using quantity theory of money and Fischer equation explain how money growth affect the nominal interest rate

A term where businesses do not maximize output from the given input

Discuss in detail the macroeconomic circular flow diagram. Substantiate your answer with the aid of a diagram.

The following equations describe an economy (think of C, I, G, etc as being measured in billions 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

1. How does an increase in the tax rate affect the IS curve?

How does the increase affect the equilibrium level of income?

2. Show that a given change in the money stock has a larger effect on output the less interest sensitive is the demand for money.

(b) How does the respond of the interest rate to a change in the money stock depend on the interest sensitivity of money demand?

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?