Macroeconomics Answers

Colombia is the world’s biggest producer of roses. The global demand for roses increases and at the same time Colombia’s central bank increases the interest rate. In the foreign exchange market for Colombian pesos, what happens to:

1. The demand for pesos?
2. The supply of pesos?
3. The quantity of pesos demanded?
4. The quantity of pesos supplied?
5. The peso-Canadian dollar exchange rate?

Banks in New Transylvania have a desired reserve ratio of 10 percent of deposits and no excess reserves. The currency drain ratio is 50 percent of deposits. Now suppose that the central bank increases the monetary base by $1,200 billion.

1. How much do the banks lend in the first round of the money creation process?
2. How much of the initial amount loaned flows back to the banking system as new
3. deposits?
4. How much of the initial amount loaned does not return to the banks but is held
5. as currency?
6. Why does a second round of lending occur?
7. Calculate money multiplier in this example?
8. What is the final increase in the quantity of money?

Imagine that the government unexpectedly introduces a capital income tax τ;

that is, net capital income becomes r(t) = (1 − τ)fk(k(t)). Also assume that

the tax revenues are used for unproductive government purchases. How does

this policy change the balanced growth path?

Explore transport as service and industry within the South African economy.

How do the banks create creadit control?

Explore transport as service and industry within the South African economy.

I have came across a number of articles that test on the Kuznets curve. They are using GDP and log squared GDP as independent variables for their research. I just don't get it why they have to create a brand new independent variable that is the "log squared GDP". What is the purpose of this? Why cant I interpret from the GDP value itself. For example: GDP coefficient is negative, I would just interpret it as a negative relationship between inequality and GDP. Why just why the addition of log squared GDP??? Does it have anything to do with Kuznets curve or what?

1) suggest an economic policy could be used and explain how the implementation will be change a price level

suppose we have two investment ptojects , both with initial cost of one billion.Both projects have zero return in period year 1, when they are built. project 1 return 0 in period 1 and 4 in period 2. project two on the other hand returns 2 million in period 1 and 1 million in period 2. the costs and returns of two projects are summarized in the table below?

Graph showing substantial increase in price and real income level of population decreases