Macroeconomics Answers

08. A survey indicated that chocolate is Pakistanis favorite ice cream flavor. For each of the

following, indicate the possible effects on demand, supply, or both as well as equilibrium

price and quantity of chocolate ice cream.

a. A severe drought in the Central Punjab causes dairy farmers to reduce the number of milk-

producing cattle in their herds by a third. These dairy farmers supply cream that is used to

manufacture chocolate ice cream.

b. A new report by the Medical Association reveals that chocolate does, in fact, have significant

health benefits.

c. The discovery of cheaper synthetic vanilla flavoring lowers the price of vanilla ice cream.

d. New technology for mixing and freezing ice cream lowers manufacturers’ costs of producing

chocolate ice cream.

Distinguished Lecture on Economics in Government: What Central Bankers Could Learn from Academics--And Vice Versa

Summary

according to the theory of the labor market mechanisms of supply and demand will naturally move towards equilibrium, where unemployment will be at its natural rate. S.A's unemployment for 25 years in S.A's unemployment rate have been among the highest in the world. using knowledge of the South African labor market as well as the theory of the firm examine why South Africa if faced with such high unemployment (80)

what changes will take place if spending is less than production and income

1. How government are involved in creating monopolies (10)

2. How has eskom as a monopoly has impacted on the South african economy, since 2009 (50)

1) How government are involved in creating monopolies (10)

2) How eskom as a monopoly has impacted on the South African economy, since 2008(50)

Q) a. What is Phillips curve? Draw the short-run Phillips curve and the long-run Phillips curve. Explain why they are different. [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?

a firm plans to purchase at list 200 quintals of scrap containing high metal quality metal x and low quality metal y.

1. Assume that capital adequacy line is below savings per worker function, illustrate and explain what the outcome would be. 
2. Assume that capital adequacy line is above savings per worker function, illustrate and explain what the outcome would be. 
3. Assume that capital adequacy line is equal to the savings per worker function, illustrate and explain what the outcome would be. 
4. Illustrate and explain the Solow Growth Model.
5. Illustrate and explain the Solow Growth Model that is augmented with technology.