Macroeconomics Answers

The South African income tax system is

Consider the case of a chemical plant that discharges polluting waste into a river. Further downstream, this water is used for irrigation purposes by a group of farmers. Thereafter it flows harmlessly into the sea, where the pollutants are quickly dispersed. Which of the following would constitute appropriate intervention(s) to deal with any potential economic externalities?

Q2: Collate CPI data for the last 20 years and prepare a graph of CPI vs Year. From graph identify the periods of high and low inflations.

First, suppose we have a representative individual living for two periods and has utility, U = ln C1 + ln C2. Let his/her labour income in the first period to be Y1 and zero in the second period. Let the rate of return to savings, r, to be influenced by a random shock, find the first-order condition for his/her choice of C1. Explain how, if at all, does consumption respond to the uncertainty in the rate of return?

Second, suppose we extend the time horizon to infinitely lived agents, and let the individual also supply capital to a representative firm in the economy. Formulate and solve the firm’s profit maximization problem. You can assume price level to be fixed and normalized to one, but you should explain the economic intuitions of the first-order conditions.

First, suppose we have a representative individual living for two periods and has utility, U = ln C1 + ln C2. Let his/her labour income in the first period to be Y1 and zero in the second period. Let the rate of return to savings, r, to be influenced by a random shock, find the first-order condition for his/her choice of C1. Explain how, if at all, does consumption respond to the uncertainty in the rate of return?

Second, suppose we extend the time horizon to infinitely lived agents, and let the individual also supply capital to a representative firm in the economy. Formulate and solve the firm’s profit maximization problem. You can assume price level to be fixed and normalized to one, but you should explain the economic intuitions of the first-order conditions.

Diverting major share of country's output/income to produce capital goods would help achieve higher productivity and higher standard of living

For a developing economy with lower per capita income and aspire to achieve higher productivity do you think this claim is valid ?

You are the country manager of a firm that produces and markets a generic type of soft 

drink in a competitive market in Ghana. In addition to the large number of generic products 

in your market, you also compete against major brands such as Coca-Cola and Pepsi. 

Suppose that, due to the successful lobbying efforts of sugar producers in Ghana, 

Parliament levies a ȼ1.20 per pound tariff on all imported raw sugar: the primary input for 

your product. In addition, Coke and Pepsi launches an aggressive advertising campaign 

designed to persuade consumers that their branded products are superior to generic soft 

drinks. How will these events impact the market outcomes of generic soft drinks if effect of 

the tariff is larger the effect of advertising of Coke and Pepsi on the generic type of soft 

drink? [Explain with an appropriate graph]

How will these events impact the market outcomes of generic soft drinks if effect of 

the tariff is larger the effect of advertising of Coke and Pepsi on the generic type of soft 

drink? [Explain with an appropriate grap

calculate net value added at factor cost from the following data

depreciation 20

intermediate cost 90

subsidy 5

sales 140

exports 70

change in stock (-) 10

imports of raw materials 30

 In explain how is fiscal policy could be effective in promote economic growth/ in restore from economic recession. o You may discuss about: the components in fiscal policy. (G & T) o How are the components able to increase aggregate demand. o Provide real world example/s in your explanation. o Elaboration is subject to student’s creativity and depth of study on the topic.