Macroeconomics Answers

Discuss the welfare effects of a customs union.

“The negative consequences of a real estate bubble can be particularly severe in a

currency union.” Discuss the statement

Suppose that a country’s annual growth rates were 5, 3, 4, -1, -2, 2, 3, 4, 6, and 3 in yearly 

sequence over a 10-year period. What was the country’s trend rate of growth over this 

period? Which set of years most clearly demonstrates an expansionary phase of the 

business cycle? Which set of years best illustrates a recessionary phase of the business 

cycle? 

Based on the above article, is the expected increase in residential property prices caused by demand or supply factors? Explain and illustrate your answer.

An individual consumes only two baskets, x and y. Which of the following expressions represents the utility-maximising market basket?

A.   MRS of x for y is at a maximum.

B.   P_x/P_y = money income.

C.   MRS of x for y = money income.

D.   MU_x/MU_y = P_x/P_y.

E.    All of the above.

A downward-sloping demand curve exists for:

A.   A monopolist, but not for a perfectly competitive firm.

B.   A perfectly competitive firm, but not for a monopolist.

C.   Both a monopolist and a perfectly competitive firm.

D.   Either a monopolist or a perfectly competitive firm depending on the cost of production.

E.    Oligopoly.

Determine the effects of a reduction in the tax rate from 0.25 to 0.2 on equilibrium income, budget and trade balance.

 Reflecting on the above situation justify whether the State Bank of Pakistan should opt for easy or tight monetary policy as a stabilization policy. Also illustrate it graphically. (2.5 Marks)

b.          Reflecting on the above situation justify whether the Government of Pakistan should opt for expansionary or contractionary fiscal policy as a stabilization policy. Also illustrate it graphically.   (2.5 Marks)

a.          Reflecting on the above situation justify whether the State Bank of Pakistan should opt for easy or tight monetary policy as a stabilization policy. Also illustrate it graphically. (2.5 Marks)

b.          Reflecting on the above situation justify whether the Government of Pakistan should opt for expansionary or contractionary fiscal policy as a stabilization policy. Also illustrate it graphically.   (2.5 Marks)

COVID-19 all around the world has restricted the economic activity. To stop the spread of the virus Pakistan like many other countries adopted the policy of smart lockdown. Shutting down of the industry has created adverse supply shock in the economy. While, the slowdown in business and economic activities the country is in the recessionary phase of the business cycle as the GDP growth for the FY 2020-21 is expected to be -0.2 accompanied by high unemployment and poverty rate.