Macroeconomics Answers

If Ernest Rutherford died and left $8000 to be invested for a period of 100 years to benefit medical students and scientific research, how often would this money double if it were to earn 5 percent per year for all years?

a. every 10 years

b. every 14 years

c. every seven years

d. every five years

How might federal deficits crowd out private domestic investment? How could this affect future living standards? 

Suppose events in the rest of the world cause the exchange rate to fall when the U.S. economy is at full employment. How should U.S. government react in order to maintain macroeconomic stability? Why?

Walderland is a fictitious country where the local currency is called waldis. At present, the  currency held by the public is 500,000 waldis, bank reserves are 500,000 waldis, and the required  reserve-deposit ratio is 0.10. Assume throughout the problem that the public does not wish to change  the amount of currency they hold. The central bank in Walderland conducts an open market sale of  200,000 waldis. What is the new money supply?

Explain the effects on the real money supply and current price level of a slowdown in the rate of money growth. (kindly.

A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a Cup O’ Soup for $1.50 per meal. Hisweekly food budget is $60.

a). Draw the budget constraint showing the trade-off between dining hall meals and Cups O’ Soup. Assuming that he spends equal amounts on both goods, draw an indifference curve showing theoptimum choice. Label the optimum as point A.

b). Suppose the price of a Cup O’ Soup now rises to $2. Using your diagram from part (a), show the consequences of this change in price. Assume that our student now spends only 30 percent of his income on dining hall meals. Label the new optimum as point B.

Between 1960 and 2010 the annual growth rate was 3% in country A and 1% in country B. The two countries are in the process of convergence if:

(a) in 1960 country A was poorer than country B

(b) in 1960 country A was richer than country B

(c) since 1960 the capital output ration has increased more in country A than in country B

(d) the savings rate is higher in country A than country B

(e) both (a) and (c)

In the classical model of the labour market, involuntary unemployment will increase if:

Suppose that 

 C = 60 + 0.8YD

 I = 150 - 10r

G = 250

T = 200

Ms

= 100

 Md

= 40 + 0.1Y - 10r

 a. Write the equations for the IS and LM schedules. 

 b. Find the equilibrium values for income ( Y0 ) and the interest rate ( r0 ). 

Given the following national income model:

and

𝑇=𝑇 +𝑡𝑌 0

𝑌 = 𝐶 + 𝐼0 + 𝐺0

𝐶 = 𝐶0 + 𝑏(𝑌 − 𝑇) 

where 𝑌 = 𝑖𝑛𝑐𝑜𝑚𝑒, 𝐶 = 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛, 𝑇 = 𝑡𝑎𝑥𝑎𝑡𝑖𝑜𝑛;

𝑤h𝑒𝑟𝑒 𝐶0 > 0; 0 < 𝑏 < 1; 0 < 𝑡 < 1

Using Cramer’s rule to derive an expression for the equilibrium level of income, consumption, and taxation.