Macroeconomics Answers

Use a graph to show how the addition of lump-sum tax (a tax independent of income)

influences the parameters of the income determination model. Graph the two systems

individually, using solid line of (1) and dashed line for (2).

(1) AE = C + I

C = 100 + 0.6 Y

Io = 40

(2) AE = C + I

C = 100 + 0.6 Yd

Io = 40

Yd = Y – T

T = 50

A local restaurateur who had been running a profitable business for many years

recently purchased a three-way liquor license. This license gives the owner the

legal right to sell beer, wine, and spirits in her restaurant. The cost of obtaining

the three-way license was about #90,000, since only 300 such licenses are

issued by the state. While the license is transferable, only #75,000 is refundable

if the owner chooses not to use the license. After selling alcoholic beverages for

about one year, the restaurateur came to the realization that she was losing

dinner customers and that her profitable restaurant was turning into a noisy,

unprofitable bar. Subsequently, she spent about #8,000 placing advertisements

in various newspapers and restaurant magazines across the state offering to sell

the license for #80,000. After a long wait, she finally received one offer to

purchase her license for #77,000. What is your opinion of the restaurateur’s

decisions? Would you recommend that she accept the #77,000 offer? Why?

What does the Phillips curve signify? How do you reconcile the difference in the shape of the curve in the short run and 

the long run?

What are the implications of IS and LM curves? What are the factors on which the position and the slope of IS and LM 

curves depend?

The demand curve for eba at mama abuja shows an inverse relationship between price and quantity demanded in 2020 but in 2021 the demand for eba at mama abuja shows a positive relationship between price and quantity demanded. Kindly explain the factors responsible for this change 

Given a macaroni economic model:

C=200+2/3yd

G=500

I=300

X=100

M=20+1/10y

T=15+1/20y

Required: determine equilibrium income, consumption exp, total tax, the multiplier

Given a macaroni economic model:

C=200+2/3yd

G=500

I=300

X=100

M=20+1/10y

T=15+1/20y

Required: determine equilibrium income, consumption exp, total tax, the multiplier

Suppose there are only three firms in an economy. Firm A grows crops and extracts minerals from its land with no inputs from other firms. Its sales are $200million annually, half of which goes to households and half to firms B and C in equal amounts. Firm B buys inputs from A and sells its entire output of $400million to Firm C. Firm C buys inputs from A and B and sells its $900million output directly to consumers (though 20% of this is overseas). What is GDP at basic prices? If there is only one tax – VAT at 10% - what is GDP at market prices

4) What minimum order value (MOV) should we set for the restaurants to be breakeven if our order commission is 25%, minimum delivery fee (paid by eaters) is 1.5 EUR and courier earnings (paid by Bolt) are 3.5 EUR?

Q: A consumer's utility function is given by the expression: U = (0.6X^0.5+ 0.4Y^0.5)².

• Determine the marginal utility functions for each commodity. Does marginal utility decrease when consumption increases?
• Assuming that the price of good X is Rs 15 and the price of Y is Rs 6, write the equation of the budget line and plot it when income is Rs 450. What is its slope? What does it indicate?
• Calculate the marginal rate of substitution of Y for X and interpret its economic meaning. Write the equation showing the consumer's equilibrium condition.
• Obtain the equilibrium values of X and Y.
• Find the expressions for change in MU_x due to an increase in Y and change in MU_y due to an increase in X.