Macroeconomics Answers

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

If consumption is C=100+0.75Yd

Taxes is T=50+0.5Y

Export is X=200

Import is M=50+0.25Y

Government spending is G=150

Investment is I=200. Y is domestic income and Y is private disposable income. Determine the surplus or deficit in the government budget at equilibrium

If consumption is C=100+0.75Yd

Taxes is T=50+0.5Y

Export is X=200

Import is M=50+0.25Y

Government spending is G=150

Investment is I=200. Y is domestic income and Y is private disposable income. Determine the value of the economy's multiplayer which is applicable to government spending and interpret it.

If consumption is C=100+0.75Yd

Taxes is T=50+0.5Y

Export is X=200

Import is M=50+0.25Y

Government spending is G=150

Investment is I=200. Y is domestic income and Y is private disposable income. Illustrate aggregate spending and equilibrium income on a diagram.

An open economy is described by the following system of macroeconomic equations, in which all macroeconomic aggregate are measured in billions of Namibian dollars, N$:Y=C+I+G+X-M. C=100+0.75Yd. T=50+0.5y. I=200. X=200. M=50+0.25y. G=150. (a)Determine the equilibrium level of income/output. (b)Illustrate aggregate spending and equilibrium level of income on a diagram (c)Determine the surplus/deficit in the government budget at equilibrium.        (d)Determine trade balance at equilibrium. 

(e)Determine the value of the economy’s multiplier, which is applicable to government spending, and interpret it. 

(f)Use the multiplier applicable to export, to explain how a 100 –billion decline in demand for export could affect the economy’s:GDP/ income, Balance of payment & Government budget

You are the manager of medium-sized company that assembles personal computers in Ghana. You purchased most components such as random access memory (RAM), which is an input for your personal computers, on a competitive market. Based on your marketing research, consumers view personal computers in the Ghanaian market as a normal good. One morning, you picked up a copy of the Graphic Business, published by the Graphic Communications Group limited, and read an article indicating that the price of RAM have been increased effective the next day, forcing manufacturers to produce computers at a high unit cost. In addition, the article indicated that consumer incomes are expected to fall over the next two years as the economy dips into recession. Explain your answer with an appropriate diagram, how these events would affect the equilibrium price and quantity.

A bakery shop sells fresh baked bread from 5 a.m. until 3 p.m. every

day. Any bread not sold by the end of the day is thrown away. The

bread packet cost Rs.8 to produce and the bakery is selling a dozen

bread is at Rs.10.00.Since this shop does not sell old bread the next

day, what minimum price the bakery should charge if he still has 10

dozen left at 2:30 p.m.?

Puja likes strawberries and total utility derived by her from

consumption of strawberries is given in the following table. Analyse

the consumption of the number of strawberries if the per piece price of

strawberry is Rs.30.

Strawberry

(no. of piece) 1 2 3 4 5 6

Total Utility (Rs) 70 125 170 210 240 250

After engineering you have got job opportunities from three different

companies like HCL, Ashok Leyland and HP with salary package of Rs.

300000, Rs. 325000 and Rs. 400000 respectively. Looking into the

financial benefit what is the opportunity cost of joining HP?

When policymakers make policies that change the costs and benefits 

that people face, they can alter behaviors. Explain with the relevant 

principle that you have studied.