Macroeconomics Answers

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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Question: In the long run, the output level which is obtained when capital (K) and labor (L) are employed at the maximum level for a given level of technology is called the:

Answer Choices Below [1 Correct Answer] -

A. Actual Output

B. Nominal Output

C. Real Output

D. Potential Output

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 the 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.