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To revive the growth rate of the economy, a slew of measures have been undertaken by
the government and the RBI. Analyse any three of them, these measures can be as old
as one year. Try to explain your answer by using different concepts of macroeconomics
that you have studied in your class.
Use specifically the Solow growth model to discuss the implications of this pandemic
on the prospects of long-run economic growth for South Africa.
C = 3000
I = 2000
G = 2500
T = 0.2Y
MPC = 0.5
X=6500
Z=5500 + 0.2Y
i. Find the equilibrium level of income.
ii. If investment expenditure decreases by 100, what will be the change in Y?
iii. Using the initial values, if G increases by 300 what will be the new level of Y?
iv. Using initial values, what will the new level of Y be if the tax rate rises to T=0.3Y?
A) What benefits can be derived from break even analysis?
B) What data are necessary to construct a break-even chart?
1) With reference to the simple accelerator, explain the behaviour of inventory investment when the economy starts to recover
To revive the growth rate of economy, a slew of measures have been undertaken by the government and the RBI. Analyse any three of them, these measures can be as old as one year. Try to explain Your answer by using different concepts of Macroeconomics that you have studied in your class.
Government decides to increase the expenditure on giving subsidies to the farmers by rs.10 crore. As per a team of experts instead of giving subsidies, government should increase spending of rs.10 crore on building the cold storages and roads. Use the concept of multiplier to explain, you are in favour of which type of spending: on subsidies or cold storage and roads? Let's assume MPC is 0.8 and t=.25 and y= 600 crore. Use diagram to explain your answer.
a) A hypothetical economy is given by the following identities:
C = 3000
I = 2000
G = 2500
T = 0.2Y
MPC = 0.5
X=6500
Z=5500 + 0.2Y
i. Find the equilibrium level of income.
ii. If investment expenditure decreases by 100, what will be the change in Y?
iii. Using the initial values, if G increases by 300 what will be the new level of Y?
iv. Using initial values, what will the new level of Y be if the tax rate rises to T=0.3Y?
v. Calculate the budget deficit/surplus using the initial values.
vi. Calculate the trade balance using the initial values
Discuss from the solow model the 3 factors that affect long-run living standards
Y=E
Autonomous expenditure = 3500
Equilibrium income = 9800
Full employment level of income is = 14000
i. Illustrate the above using a well labelled diagram.
ii. What is the value of the multiplier in this economy?
iii. Give the equation of the aggregate expenditure line.
