Macroeconomics Answers

1. Suppose that a seller decreases price for his/her good by 5 percent. Discuss how total revenue changes when : a) Ed=0.3  b) Ed=1 c) Ed=1.5

“Assess the likely economic impact of an increase in the savings ratio”

In 2016, U.S. population was 320 million people, and U.S. employment was 160 million people. Using this information and the bar graph above, in 2016, U.S. productivity was approximately _____.

Group of answer choices

$37,500

$50,000

$100,000

$350,000

The GDP for 2016 was $50,000

The potential of the banks to create money is decreased when

A group of people find themselves stranded on a desert island, where there is fresh water, food, and nice weather. They all undertake various activities including producing and foraging for food, and offering services such as entertainment and haircuts. They have with them a large box of pumpkin seeds which they decide to use as their currency. The seeds can also be eaten, or planted and more seeds harvested and again used for money, eating, or planting further.

a. Provide a plausible explanation as to why an increase in the minimum wage might not have any impact on unemployment

The money supply consists of ............................................. and ............................

Increases in demand caused the price of cotton to more than triple between early 2010 and early 2011. Did cotton farming become a highly profitable industry as a result? Explain why or why not

What is the estimated 2022 GDP Loss (in percentage) in comparison to pre-covid levels

(January 2020 forecast) in China and Other Emerging Economies in Asia other than

China?

What do you understand by Real GDP? What is the Real GDP Growth Rate of India and

China in 2019? What is the estimated real GDP growth rate of India and China in 2020?

What is the projected real GDP growth rate of India and China in 2021 and 2022

2. A US based IT firm required GBP 100000 in 180 days. The company feels that exchange

rates are expected to fluctuate in the next 6 months. Their near accurate estimate based

on a good quality research were as below:

Current Rate of GBP = USD 1.50

180 days forward rate for GBP = USD 1.48

Call premium USD 0.02 (strike price of USD 1.50 for 180 days)

Interest Rates in London for deposits – 4.5% and for loans – 5.1%

Interest Rates in New York for deposits – 4.5% and for loans – 5.1%

A fair estimate of exchange rate after 180 days is expected to be USD 1.44 with a

probability of 20%, USD 1.46 with a probability of 60% and USD 1.53 with a

probability of 20%.

Advise the company on a good hedging strategy. Make suitable assumptions if required

and state the same