Macroeconomics Answers

As an economics student your budget for meals at the university is Rs 12,000 and you have two options during the course of you studies:

Eating at the university cafeteria for Rs 40 per meal

Eating at the dining hall for Rs 10 per meal.

a. Draw the budget constraint showing the trade-off between cafeteria and dinning hall meals, with cafeteria meals on x-axis and dining hall meals on y-axis. Assume you spend equal amounts on both goods, draw an indifference curve showing the optimum choice. Label the optimum as point A.

What is supply

The following equations refer to the goods market of an economy in billions of euros:

C=480 +0,5Yd

I=110

T=70

G=250

1.Solve for goods market equilibrium 

2.Find equilibrium disposable income

3.find equilibrium consumption 

4.calculate the private savings,public savings and investment spending

Assuming no government intervention and considering the original demand and supply curves (D and S), at a price of R10 there is an _____________ ______________ of 40 cups of coffee.

Consider an economy having following values of Consumption, Investment, Government Spending, and Taxes 

C = 300 + 0.7Yd     I = 200 – 200i    G = 600    T = 100    

Derive the aggregate demand equation. Also, calculate the output in an economy. 

List and provide a short explanation on four trade policy measures available to countries to limit imports

In year 1, your anual income is p 45, 000.00, and CPI is 143.6; in year 2, your anual income is 51, 232,and the CPI is 150.7. Has your real income risen, fallen, or remained constant? Explained

1 The imperfect information model assumes: Select one from the following options.

i. Adaptive expectations and vertical AS curve in the short run.

ii. Adaptive expectations and vertical AS curve in the long run.

iii. Adaptive expectations and vertical AS curve both in the short and long run.

iv. Rational expectations and vertical AS curve in the long run.

1 Choose the wrong statement regarding national savings.

Select one from the following options.

i. The amount of national savings depends directly on the real interest rate.

ii. National savings represent income after deducting private consumption and government expenditures.

iii. National savings are the sum of private and public savings.

iv. All statements are correct.

2 "People confuse a change in the overall price level with a change in their relative prices." That is the main principle. Select one from the following options.

i. the model of sticky wages.

ii. classical aggregate supply curves.

iii. Lucas model of incomplete price information.

iv. Friedman's model of workers' misperception.

1 A person deposited EUR 200,000 he was holding in cash into a bank account. Determine how the money supply in a banking system with 100%

reserves changes.

Select one from the following options.

i.The money supply will increase by EUR 200,000 times a money multiplier.

ii. The money supply will increase by EUR 200,000.

iii. The money supply will not change.

iv. The money supply will increase by EUR 100,000.

2 Consider the life cycle hypothesis. A consumer's consumption function in the form C = 0.025W + 0.5Y implies that: Select one from the following options.

i. all offered options are correct.

ii. consumption will increase by EUR 25, when wealth will increase by EUR 1,000.

iii. life expectancy is 40 years

iv. Half of a person's life expectancy is spent in retirement