Macroeconomics Answers

The demand and Supply functions for three goods are given as follows:

D_x=100-3P_x+P_y+3P_z

D_y=80 +P_x-2P_y-2P_z

D_z=120+3P_x-P_y-4P_z

S_x=-10+P_x

S_y=-20=3P_y

S_z=-3+2P_z

Q1: Determine the equilibrium prices and quantities of all three goods.

·         The government decides to:

a.       Impose a 25% tax on X

b.      Impose a 5Rs unit Tax on Y

c.      Gives a 10% subsidy on good Z

·         Analyze the impact of each of these three policies separately on equilibrium prices and Quantities.

·         Also calculate changes in consumer and producer surpluses and the amount of revenue earned by government.

Q2: Repeat this exercise when polices (a, b),(b,c) & (a, b,c) are jointly implemented. Which policy choice is best? Why?

Q: 3 Provide theoretical justification (using diagrams) of all results obtained.

Is there any principal on which aggregate economy works,if yes then explain it

Explain the difference between positive economics and normative economics. 

The cost function is given by÷

C(y)=120y-y^2+0.02^3.

Obtain the following :

1.The average variable cost

2.The marginal cost

C = 160 + 0.6 * YD

I = 150

G = 150

T = 100

Solve for the following variables. a) Equilibrium GDP, Y. b) Disposable income, YD. vs)

Consumer expenditure, C.

Specifier the equation of the equilibrium of the goods and services

Question: Which of the following would be considered an investment expenditure in GDP calculation?:

Answer Choices Below [1 Correct Answer] -

A. The Jones buy a house which was built in 1980.

B. The government hires new workers to build a new freeway.

C. Frank purchases a few stars of Microsoft.

D. Kim's Boat Storage Company buys a new boat lift.

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Question: What is the primary use of studying national income accounting?:

Answer Choices Below [1 Correct Answer] -

A. Can be used to measure a nation's output but not its production or consumption.

B. It helps to avoid the technical problem of aggregating economic data.

C. Provides a set of numbers, rules and definitions for measuring economic activity in the aggregate economy.

D. It is a useful tool for microeconomics.

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Question: The more or less regular pattern of expansion (recovery) and contraction (recession) in economic activity around the path of trend growth are known as:

Answer Choices Below [1 Correct Answer] -

A. Potential Cycles

B. Economics Cycles

C. Business Cycles

D. Price Cycles

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Question: Which of the following economic variables is considered to be fixed in the short-run?:

Answer Choices Below [1 Correct Answer] -

A. Output

B. Prices

C. Both prices and wages

D. Wages

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