Macroeconomics Answers

Explain in detail the process of Monetary Policy transmission of an increase in the cash interest rate. Use relevant graphs to describe how a Central Bank’s action on the interest cash rate ripple through the economy and lead to the target policy goal. (Three connected diagrams should be used: (1) money supply and demand (2) investment demand schedule (3) AS/AD diagram. Interest rates is the variable that connects the first and second diagram).

Consider an economy described by the following equations:

C=800+0,8Y

I=400-2000i

G=120

NX=60-50-0,05Y

MS=2000

MD=0,2Y-2000i

Assuming that the interest rate equals i*=0,1, what is the level of equilibrium output?

How does unemployment benefits and tax incentives affect the employers, government and level of unemployment

explain which measures can be taken to remove deflationary gap (at least two).

how inflationary gap can be removed without decreasing interest rate? 

• Explain the difference between a movement along the demand (supply) curve and a shift of the demand (supply) curve

Nominal GDP in a country was $6890 billion in Year 2012 and $7650 in 2013. The GDP deflator is 102.4 in 2012 and 105.6 in 2013. Find

a) inflation rate from year 2012 to 2013

b) growth rate of real gdp from 2012 to 2013

How change in the world price of oil affect the amount of frictional unemployment

Expansionary fiscal policy refers to_______, while contractionary fiscal policy refers to_______.

[1] an increase in government borrowing; decrease in government spending.

[2] decrease in taxes; increase in government spending.

[3] an increase in government spending; an increase in taxes.

[4] demand management policy; monetary policy.