Macroeconomics Answers

What is a good explanation for why resource scarcity is a problem that modern economies handle fairly well while environmental issues are not?

(1) Economies are able to respond to resource scarcity using principles from Malthusian Theory.

(2) Modern economies do not actually handle resource scarcity very well.

(3) Economic incentives to deal with environmental issues are not as clear as incentives to deal with resources scarcity.

(4) Economies are equally able to deal with changes in resource scarcity and environmental issues because both require government intervention.

(5) None of these are good explanations for the difference.

Which of the following would cause an unambiguous increase in the budget balance?

(1) A decrease in tax revenues.

(2) Expansionary fiscal policy

(3) Increases in government purchases of goods and services.

(4) Contractionary fiscal policy.

(5) None of these increase the budget balance

Which of the following is probably the most important driver of productivity growth?

(1) Increases in the stock of physical capital.

(2) Increases in the amount of natural resources available.

(3) Increases in the technical means of production of goods and services.

(4) Increases in the population.

(5) Increases in improvements in labor created by the education and knowledge in the workforce.

Explain saving investment gap and its relation with budget defecit??

Q) Suppose there are two groups of people in an economy, with their respective consumption function.

                        C_A=100+0.5Y_A

                        C_B=150+0.75Y_B

   planned investment 200.Where C_i and Y_i  are respectively consumption and income level

 for the ith group (for all i=A,B). Suppose each group gets 50% of total GDP in the economy.

Determine the equilibrium level of income. Considering the equilibrium income as the initial income, a lumpsum tax T is imposed on Group A and the same amount is given as a transfer to Group B.

 Now determine planned consumption, planned savings , planned aggregate Demand and the Actual Investment as the initial level of income

Use specifically the Solow growth model to discuss the implications of this pandemic 

on the prospects of long-run economic growth for South Africa.

1.     Find out number of endogenous and exogenous variables.

2.     Find out equilibrium level of national income in closed and open economy.

3.     Find out equilibrium level of consumption in closed and open economy.

4.     Find out equilibrium level of savings in closed and open economy.

5.     Prove that S + T = I + G + R in closed economy and S + T + M = I + G + R + X in an open economy.

6.     Find out budget surplus or budget deficit in closed and open economy.

7.     Find out balance of trade or trade deficit or surplus in the economy.

8.     Find out foreign trade multiplier.

9.     Let imports are increased from M to new imports M + (20 + 0.24Y), then find out new equilibrium income in an open economy.

In the North Island economy, all domestic production is consumed domestically, and there is no import of foreign goods. The policy makers in North Island fear that the domestic production is too high, which may lead to inflation in the longer run (even though we assume a constant price level in the short run). At the same time, it is an election year, and the sitting government has promised to not decrease the households’ disposable income.

Assume that the government does act appropriately to improve the situation.

B) Describe in words, using full sentences, the effects on the market for goods and services in North Island. Which curves are shifting, why do they shift and in what direction?

C) Describe in words, using full sentences, the effects on the market for money in North Island. Which curves are shifting, why do they shift and in what direction?

D) Describe in words, using full sentences, the effects on the overall economy. Explain the shifts and movements in the IS-LM-diagram

n the North Island economy, all domestic production is consumed domestically, and there is no import of foreign goods. The policy makers in North Island fear that the domestic production is too high, which may lead to inflation in the longer run (even though we assume a constant price level in the short run). At the same time, it is an election year, and the sitting government has promised to not decrease the households’ disposable income.

A) What can the government in North Island do to improve this situation? 

What is the effect of change in personal taxes and the government expenditure on the circular flows of income and expenditure? Does a balanced budget policy result in expansion and reduction in the circular flows?