Macroeconomics Answers

In the two-sector economy, Y = Yd. Prove Y = Yd.

What appen, f a reduction in aggregate supply is followed by an increase in aggregate demand

Calculate (a) Gross National Product at MP from the following data.

ITEMS

 (Rs. in Crores)

i. Net factor income to abroad.

10

ii. Private income

1700

iii.Operating surplus.

300

iv. Corporation tax

150

v. Undistributed profit.

30

vi. M I

500

vii. C F C

100

viii. Personal Taxes

200

ix. Compensation of employee.

1200

x. N I T

250

Suppose both cooperatives are price-takers; with 𝑃𝐺=12 and 𝑃𝐹 =10 being the market prices of gold and fish respectively. The cost of producing G units of gold is 𝑐𝑔(𝐺,𝑥)=𝐺2+(𝑥−4)2; where 𝑥 is the quantity of mercury effluent discharged into the dam. The cost of producing F units of fish is 𝑐𝐹(𝐹,𝑥)= 𝐹2 + 𝑥𝐹 ; where 𝑐𝐹(𝐹,𝑥) is an increasing function of 𝑥.

a) Determine the profit maximizing level of gold output, profit and level of mercury effluent discharged into the dam. Comment and explain your results.

b) What is the fishing cooperative’s profit maximizing level of fish output and profit? Explain your results.

c) Suppose the two cooperatives were merged to operate as a single firm; determine the socially optimal level of gold and fish output, mercury effluent and profit. Explain, comment on and contrast your results with those obtained in a and b above.

d) Suppose property rights to the dam water are created and assigned to the fishing cooperative. Does this induce efficiency and explain why

  Identify one type of inflation and outline its main causes Analyze its impact of inflation on both individuals and businesses,

Explain what factors determine how much investment is required to maintain a given level of capital per effective worker. 

Discuss in detail the macroeconomic circular flow diagram. Substantiate your answer with the

aid of a diagram.

Demand is defined as

from lucas point of view, what are the limitation of the Keynesian model? What improvement does he suggest?