Macroeconomics Answers

in the aggregate expenditure model for a closed economy assuming investment, government spending and taxes are exogenous, if the marginal prosperity to consume is 0.8, a simultaneous 50 unit increase in government spending and a 20 unit decrease in investment will change equilibrium income by?

Explain the implications on Airbnb should South Africa implement a command economy.

Which of the following statements are correct? a. The use of money eliminates the need for a double coincidence of wants associated with a barter economy. b. An economy in which goods are traded for other goods is called a barter economy. c. Money consists of notes and coins only.

What is Elasticity of Demand? Explain Price, Cross and Income Elasticity of Demand used in managerial decision making process.

What do you mean by Monopoly? How price and output is determined in short and long run in Monopoly Competition?

1.    Show using the IS-LM graph the impact of an expansionary fiscal policy if the LM curve is vertical. If you were the Economic Planner in this country, how would you implement the fiscal policy without causing any crowding out of private investment? (You may insert a snapshot of the graph if drawn manually) (5 marks).

1.    Suppose the IS curve is Y = 39XX-100i and Y = 1500 + 250i is the LM curve, where XX is the last two digits of your ID number. Using these compute:

a)    The equilibrium interest rate and output (i*and Y*).

b)   If government spending was increased by 100m with an immediate impact elasticity of 2.5 in the goods market, determine new income and interest rate.

c)    Determine the impact of the above policy on private investment if it is known that di/dA = XX/100, where XX is the last two digits of your ID number.

d)   Determine the magnitude of the change in money supply required to eliminate any crowding out effect in (c) above. Suppose di/dMs = -0.1X, where X is the last digit of your ID number.

e)    Explain the dynamics represented in (a-d) using an IS-LM space. (You may insert a snapshot of the graph if drawn manually).

Knowing a country’s economic problems and issue help to gauge or determine what

about a country?

Qd = 25000 – 2P

Qs =10000 + 1P

Calculate price elasticity of demand using point elasticity method when the construction industry is in equilibrium and interpret the result? 

1.     Suppose the IS curve is Y = 39XX-100i and Y = 1500 + 250i is the LM curve, where XX is the last two digits of your ID number. Using these compute:

a)     The equilibrium interest rate and output (i*and Y*).

b)     If government spending was increased by 100m with an immediate impact elasticity of 2.5 in the goods market, determine new income and interest rate.

c)     Determine the impact of the above policy on private investment if it is known that di/dA = XX/100, where XX is the last two digits of your ID number.

d)     Determine the magnitude of the change in money supply required to eliminate any crowding out effect in (c) above. Suppose di/dMs = -0.1X, where X is the last digit of your ID number.

e)     Explain the dynamics represented in (a-d) using an IS-LM space. (You may insert a snapshot of the graph if drawn manually).

With the aid of a diagram and using the Keynesian analysis , explain in detail how income and aggregate spending are affected by the following by the government spending and a cut in spending by European firms