Macroeconomics Answers

Find an expression for the equilibrium quantities X and Y

Given U=f(x,y)=Xa Yb and the budget constraint as M=PxXpyY

With the aid of appropriate diagram, illustrate income and substitution effect for an increase in price of goods x

The internet has allowed for an improvement in the dissemination of

information, including in the labour market. In the context of a model with

matching frictions, we can interpret this as an increase in the matching efficiency, A.

If that is the case, what would the model predict? In answering this question, use a

model with matching frictions

The college graduates of 2000 could hardly have asked for better luck. The unemployment rate dropped to 4.1 % in May 2000- roughly, the lowest level in a generation- and employers were literally scrambling for new hires. Starting salaries rose, many graduating seniors had numerous job offers, and some firms even offered $10,000- $20,000 bonuses to students who signed the dotted line.

(i) Briefly explain and justify what prevailing situation was taking place in the year 2000. (2 marks) (ii) Identify and explain two (2) fiscal policies and two (2) monetary policies that the US government may have used to correct this situation. (6 marks) (iii) Use a diagram to illustrate the correction measures. (2 marks) 

Write an essay in which you discuss the costs of unemployment in South Africa, and explain measures that can be implemented to combat unemployment. (15 marks)

Question 1 (20 marks)

Write an essay in which you critically evaluate how South Africa is performing with regard to the five (5) main macroeconomic objectives.

Question 1 (15 marks) the questions that follow:

Commodity prices have been increasing on the world market. South Africa is a major exporter of commodities such as gold and platinum.

1.1 Use a foreign exchange diagram to illustrate and explain the effect of the increase in commodity prices on the rand–dollar exchange rate, ceteris paribus. (10 marks)

1.2 Define the terms of trade, and explain how the terms of trade will be affected in South Africa by the increase in commodity prices. (5 marks)

What is the multiplier

1.) Predict how each of the following economic changes will affect (separately) the equilibrium price and quantity in the financial market for home loans. Sketch a demand and supply diagram to support your answers.

1. The number of people at the most common ages for home-buying increases.
2. People gain confidence that the economy is growing and that their jobs are secure.
3. Banks that have made home loans find that a larger number of people than they expected are not repaying those loans.
4. Because of a threat of a war, people become uncertain about their economic future.
5. The overall level of saving in the economy diminishes.
6. The federal government changes its bank regulations in a way that makes it cheaper and easier for banks to make home loans.