Macroeconomics Answers

Assume that the government of Japan wants to control deflation and increase aggregate demand. The government then increased the Reserve Ratio from 10% to 20% hoping that a planned deposit of $5,000,000 will be made.

A) Calculate the new total money supply that will be generated from the planned deposits.

B) Explain whether the government policy of increasing the reserve ratio is right.

Summarize w.w. rostow's stages of economic growth

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

Using this information solve the question numerically:

Beginning from the initial classical equilibrium suppose that the central bank increases the money supply by 420 while price remains fixed as it's initial long run equilibrium level. What will be the impact of this policy on all endogenous variables in short run and long run?

With clear illustrations, discuss challenges associated with offshoring; and systematically highlight strategies necessary for assured venture growth in any given business environment

With clear illustrations, discuss the notion that entrepreneurs are born, not made. Outline the various myths associated with entrepreneurship.

consolidated government expenditure is expected to grow by 7.1 percent over the medium term, reaching R1.69 trillion in 2018/19. At this rate, spending growth will outpace inflation by 0.8 percent.

True or False Questions

Question 36

As foreign prices raise, we expect domestic exports to increase; and if domestic prices raise, the exports to decline

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True

False

Question 37

Lack of technology, limited range of processed products, trade costs and supply inconsistency are major problems for Fiji (or Pacific) economies trade performance.

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True

False

Question 38

If income elasticity of Fiji’s exports are high, a fall in the quality of Fijian goods will drastically reduce Fiji’s trade balance.

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True

False

Question 39

In a typical fixed exchange rate system, the money supply is less independently controlled by the central bank.

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True

False

Question 40

Despite different last-two digits of yours and your friend’s ID numbers, if IS = 20XX-150i and LM = 5XX+20i, the value if i and Y will be same if both XX stands for the last two digits of any one’s number.

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True

False

True or False Questions

Question 29

If the goods market equilibrium was Y = 2500-50i, and government expenditure was increased by 50, a possible new IS curve would be Y = 2750-50i, provided α_G was 2.5.

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True

False

Question 30

In 2020, the expected decline in GDP growth was -19% for Fiji.

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True

False

Question 31

The aggregate expenditure multiplier in ADAS is larger than that of the ISLM model.

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True

False

Question 32

The markets involved in IS-LM are goods and money markets

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True

False

Question 33

The rate of interest (i) is determined in the bonds market

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True

False

Question 34

A possible expression that can model government spending is G = G_t-1 where (t) is current year.

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True

False

Question 35

A devaluation will improve current account balance sustainably in the long-run

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True

False

True or False Questions

Question 23

Under perfect capital mobility, interest rates (i_d, i_f) can permanently vary, if monetary policy is tightened.

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True

False

Question 24

The degree of capital mobility could be impacted by differences in income tax regimes.

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True

False

Question 25

A fixed exchange rate is best for small economies like Fiji, at least during the COVID19 crisis

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True

False

Question 26

A devaluation can cause inflation and lead to a raise in external debt.

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True

False

Question 27

A BOP surplus will increase foreign reserves is the domestic economy operates under flexible exchange rate system.

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True

False

Question 28

If nominal GDP was 1500 and real was 1450, the implicit GDP deflator would imply a moderate rate of inflation of about 3%.

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True

False

True or False Questions

Question 17

In a flexible exchange rate system, with perfect capital mobility, a devaluation will increase GDP but interest rate will remain unchanged.

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True

False

Question 18

The biggest policy challenge for most countries now is managing economic contraction.

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True

False

Question 19

COVID19 crisis has reduced trade to/from the Pacific region.

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True

False

Question 20

The following are constraints for economic development in Samoa: subsistence agriculture, limited tourism and lack of domestic private investment.

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True

False

Question 21

If I = I_0-b_i, then the value of b will determine the impact of monetary policy on investment.

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True

False

Question 22

In order to reduce market interest rate, the central bank conducts open market sale of bonds.

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True

False