Macroeconomics Answers

• Scarcity, Opportunity Cost, Wants, Entrepreneurship, Markets, Law of Demand, Law of Supply, Market Failure, The Informal Economy, Unemployment Rate, Structural Unemployment, Human Capital, Inflation Rate, Gross Domestic Product, Consumption, Economic Growth, Supply Side Fiscal Policy, Taxation, Public Debt, Fiat Money, Cryptocurrencies, Liquidity, Trade-off between Risk and Return, Monetary Policy, and Saving.

General Instructions:

Choose one concept from the list above, and write a paper a 500 to 550 word paper (500 words is the absolute minimum) in which you state a response to the following prompt;

"Before completing all 5 Graded Discussions I thought about (one of the concepts from the list) in this way ..., now I think ... ".  

1.     The following functions are given:

        C = 100 + 0.8Y

I = 120-5r

M_s = 120

M_d = 0.2y-5r

A.   develop the Investment saving curve and draw the curve

B.    write the LM equation and draw the curve

C.    find the equilibrium income and interest rate

D.   what is the  equilibrium income if the equilibrium interest rate increased by 25%

Q:1 An investor deposits a sum of Rs 100,000 in an investment company with a promise of a rate of return of 18 percent per year. What will the sum amount be at the end of 5 years if the interest is added (i) yearly, (ii) six-monthly, (iii) quarterly, (iv) monthly, and (v) continuously.

From the information given in Question #1, if the investor decides to withdraw the accumulated interest

at the end of each year, what would be his yearly earnings from the investment if added (i) yearly, (ii) six-monthly, (iii) quarterly, (iv) monthly, and (v) continuously?

A bearer bond worth Rs. 50,000 after six years. What will be the present value of the bond if interest is

added yearly at 12 percent.

A defence certificate worth one hundred rupees now would be worth Rs. 425 at the end of 10 years. What is the implied rate of compound interest?

In macroeconomic theory: A. total production is always equal to total income. B. total production is always greater than total income. C. total production is always less than total income. D. total production may be greater than total income. E. total production may be less than total income. 

Politically, we historically defined Republicans as deficit hawks; that is, individuals who preferred small deficits.  Alternatively, we historically associated freer spending with Democrats. What does your graph of the deficits since 1980 suggest about this general statement? Write a paragraph to support your conclusion? What other events might help to explain why deficits rise and fall?

Background:

Party in the White House:

• 1981-1989: Ronald Reagan, Republican
• 1989-1993: George H.W. Bush, Republican
• 1993-2001: William Clinton, Democrat
• 2001-2009: George W. Bush, Republican
• 2009-2017: Barack Obama, Democrat
• 2017-present: Donald Trump, Republican

QUESTION 23

In a perfectly competitive market, firms produce and sell goods:

1. Only to the wealthiest customers.
2. At the lowest possible average cost.
3. At the highest possible average cost.
4. At the lowest possible marginal cost.
5. At the highest possible marginal cost.

QUESTION 24

When perfectly competitive firms maximize their profits:

1. They harm society.
2. They maximize allocative efficiency.
3. They minimize allocative efficiency.
4. They minimize productive efficiency.
5. All of the above.

QUESTION 25

Perfect competition in the long run:

1. Is a hypothetical benchmark.
2. Should be avoided at all costs.
3. Causes irreparable harm to society.
4. Creates large profits for firms.
5. Makes everybody happy.

QUESTION 19

The combination of many firms entering or exiting a perfectly competitive market:

1. Will affect overall supply in the market.
2. Will not impact the overall supply in the market.
3. Will cause an increase in the demand for their products.
4. Will cause a decrease in demand for their products.
5. Will never cause the overall supply in that market to fall.

QUESTION 20

In the long run, the process of entry into a perfectly competitive market:

1. Is continuous.
2. Is impossible.
3. Will push down prices until they reach the zero-profit level.
4. Will push down prices only until the largest firms begin losing profits.
5. Will push prices up until they reach the zero-profit level.

QUESTION 21

Agricultural markets are generally good examples of:

1. Monopoly.
2. Oligopoly.
3. Variable-cost industries.
4. Constant-cost industries.
5. A decreasing-cost market.

QUESTION 22

High tech industries may be a good example of:

1. Monopoly.
2. Oligopoly.
3. Variable-cost industries.
4. Constant-cost industries.
5. A decreasing-cost market.

QUESTION 16

If a business in a perfectly competitive market is making a profit in the short run:

1. It has an incentive to expand existing factories or to build new ones.
2. It should expect to continue doing so in the long run.
3. It is guaranteed to make a profit in the long run as well.
4. It has an incentive to reduce output, causing prices to rise.
5. All of the above.

QUESTION 17

Profits are the measurement that determines:

1. Whether the firm’s products are necessities.
2. Whether a firm stays operating or not.
3. Weather for the next ten days.
4. The price of the product being sold.
5. The cost to produce the product being sold.

QUESTION 18

Individuals start businesses:

1. Only if they have to.
2. With the purpose of making profits.
3. Only in the interest of aiding society.
4. Only when it is detrimental to society.
5. Whenever the moon is full.