Macroeconomics Answers

If a consumer increases her quantity of ice cream consumed by 100% when her income rises by 25%. Calculate her income elasticity of demand for the ice cream and interpret the result.

1. If a consumer increases her quantity of ice cream consumed by 100% when her income rises by 25%. Calculate her income elasticity of demand for the ice cream and interpret the result.

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

subsides or cold storages and roads? Let’s assume MPC is 0.8 and t=.25 and Y0= Rs.

600 crore. Use diagrams to explain your answer.

 With reference to the simple accelerator, explain the behaviour of inventory investment when the economy moves from a peak to a slowdown. 

Assume that the economy is at a peak, with reference to the simple accelerator, explain the behaviour of inventory investment

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

subsides or cold storages and roads? Let’s assume MPC is 0.8 and t=.25 and Y0= Rs.

600 crore. Use diagrams to explain your answer.

Use specifically the Solow growth model to discuss the implications of this pandemic on the prospects of long-run economic growth for South Africa.

If a consumer increases her quantity of ice cream consumed by 100% when her income rises by 25%. Calculate her income elasticity of demand for the ice cream and interpret the result.

There is a positive relationship between the price of a financial instrument and its interest rate