Macroeconomics Answers

Land has been a huge debate in south Africa over the past 10 years with the EFF pushing for a land redistribution to all South African citizens. Without a doubt, many people in townships have created jobs and streams of income through invention of small businesses in their yards (i.e Residence, crèche, tarvens and Spazas). Critically discuss the impact of land use regulations on the formalization and sustainability of these small business.

If in response to this situation, the government decides to increase taxes enough to stabilize debt, this will most likely result in ________.

Can someone explain to me why these are the answers please?

1. 3.6%

2. 9.05%

3. a decrease in output

Now suppose that in response to a stimulus package, the debt-to income ratio rises to 104% which causes an increase in the interest rate to 7.7% and leaves the primary deficit-to-GDP ratio constant. The debt-to-GDP ratio will now increase by ___________.   

Consider a country with a rate of growth (g) of 0.25%, an interest rate of 2.7%, a debt-to-income ratio (B/Y) of 94% and a primary deficit of 1.3% of GDP. The debt-to-GDP ratio will increase by ___________ .

if nominal gdp rises, then so must real gdp true or false?

Given the following consumption fiction, C= 100 + 0.6YD calculate by how much induced consumption spending will decrease if the government increases taxes by R100

Question 2 [18 marks]

(a)   Explain how Life-Cycle Hypothesis and the Permanent Income Hypothesis, explain the difference between long run APC and short run APC.                                                                                               (6)

With a help of a diagram discuss how the permanent income theory of consumption explains the difference between the cross-section and time-series estimates of the Keynesian aggregate consumption function.

What are the implications of IS and LM curves? What are the factors on which the position and the slope of IS and LM curves depend?

With a help of a diagram discuss how the permanent income theory of consumption explains the difference between the cross-section and time-series estimates of the Keynesian aggregate consumption function.  

Explain how Life-Cycle Hypothesis and the Permanent Income Hypothesis, explain the difference between long run APC and short run APC.