Macroeconomics Answers

If national income increases from R150 billion to R200 billion, the money demand for transaction purpose will ______ and the demand curve for money will______. [1] decrease; make a leftward shift [2] increase; remain the same [3] cannot be determined; remain the same [4] increase; make a rightward shift 

Given the amount of money being printed the amount of Base Currency sitting as Reserves on bank balance sheets far exceeds currency in circulation when normally the reserves only slightly exceed currency in circulation in a fractional reserve system. How can one derive the cumulative inflation effect of these excess reserves via k assuming the economy being in equilibrium with the current amount of currency in circulation? These excess reserves are a liquidity trap waiting to happen in the form of massive inflation, if (post Covid supply chain problems Dir to shifting demand or reduced production capacities etc?) amd when they make their way into the economy. The k factor ought to be able to approximate what the cumulative inflation effect might be. How can that be calculated via the Cambridge k?

1.Using the concepts of demand and supply, explain why cannabis prices declined sharply by 70% in Colorado between 2014 and 2018. Use a diagram of the cannabis market to illustrate your point.

2.With the help of a numerical example, explain why California and Maine tax cannabis by weight rather than by price.

3.Using the concept of substitutes and complements, explain with the help of a diagram how legalising cannabis may possibly affect the sales of alcohol and cigarettes. When the State government evaluates the effect of legalising cannabis on tax revenue, should it look only at the sales of cannabis? Or, should it also consider the changes in the sales of alcohol and cigarettes?

The Covid19 crisis and lockdown has been a supply response, the government Use the ADAS model, in conjunction with the IS of the shock and policy response.offered a R500bn stimulus package side shock to the South African economy. In to help cushion the blow.LMBP, to explain the supply and demand dynamics Where will equilibrium income and prices settle? Draw the graphs and explain the complete chain reaction. Total mark out of 30 2

Consider the following IS-LM model in a closed economy with prices fixed at  (we are in the short run):

Md/P = Y - r

C = 1 + Y/2

I = 1 - r/2

G = G

Ms/P = M/P

Md/P ≤ Ms/P with equality if r>0

Assume that expected inflation is zero.

Explain the minimum value that the real interest rate, r, can take. Derive the IS curve. Write down the LM curve.                                                                             

n the circular flow of goods and services …

In the simplest(or introductory) form of the keynesian model, which decisions can be analyzed

What is product differentiation? What role does it play in the determination of price under monopolistic competition? Discuss.

The Covid-19 crisis and lockdown has been a supply-side shock to the South African economy. In response, the government offered a R500bn stimulus package to help cushion the blow. 

Use the AD-AS model, in conjunction with the IS-LM-BP, to explain the supply and demand dynamics of the shock and policy response. Where will equilibrium income and prices settle? 

Draw the graphs and explain the complete chain reaction. 

Given consumption = 100 +0.75Yd

Tax = 50 + 0.5Y

Export = 200

Import = 50 + 0.25Y

Government spending = 150

Investment = 200

a) Determine the equilibrium level of income/output

b) Illustrate aggregate spending and equilibrium level of income on a diagram