Macroeconomics Answers

a. The Government of Bangladesh opted for expansionary fiscal policy to fight economic depression. Identify the type of inflation it is expected to create and its impact on the wages. Illustrate the process on the graph.              (2.5 Marks, Maximum 150 words)

b. Assume the Pakistan’s economy is in recession: Pakistan implements a combination of expansionary fiscal and monetary policy. In the absence of complete crowding out what will be the effect of these policies on each of the following: (2.5 Marks, Maximum 150 words)

      i. Aggregate demand in Pakistan

      ii. The price level in Pakistan

      iii. Interest rates in Pakistan

COVID-19 all around the world has restricted the economic activity. To stop the spread of the virus Pakistan like many other countries adopted the policy of smart lockdown. Shutting down of the industry has created adverse supply shock in the economy. While, the slowdown in business and economic activities the country is in the recessionary phase of the business cycle as the GDP growth for the FY 2020-21 is expected to be -0.2 accompanied by high unemployment and poverty rate.

a.    Reflecting on the above situation justify whether the State Bank of Pakistan should opt for easy or tight monetary policy as a stabilization policy. Also illustrate it graphically.                                                                                

b.    Reflecting on the above situation justify whether the Government of Pakistan should opt for expansionary or contractionary fiscal policy as a stabilization policy. Also illustrate it graphically.                                                         

What POLICIES should  be implemented to  

address the  

ABSOLUTE POVERTY  and RELATIVE  

POVERTY?

The entry or exit of a single perfectly competitive firm has practically no effect on the market?

If the total cost of being a full-time college student for one year came to $17,000, and that student could have earned $20,000 working full time during that same year, then the opportunity cost of the year of college would be:

$3,000.

, Not Selected

Incorrect answer:

$37,000.

$20,000.

, Not Selected

$17,000.

Qs=150+14P and demand function P= 16.875-0.0625Q with 10 number of sellers and buyers.

Find equilibrium price and quantity

Find price elasticity of demand and and supply at equilibrium price and quantity

The demand for Clean-Well company’s product charges P30 per liter, how much revenue the company will earn, and how much consumer surplus will buyers benefit. Exactly, how much will buyers willing to pay for a bottle with 30 liters?

a.      In each of the following cases, does the increase in prices affect CPI, GDP deflator, or both in Pakistan? Analyze and justify your answer.                                          

i.    The price of imported capital goods used in the production of sugar has increased.

The price of Tapal tea has increased

a.      The Government of Bangladesh opted for expansionary fiscal policy to fight economic depression. Identify the type of inflation it is expected to create and its impact on the wages. Illustrate the process on the graph. (2.5 Marks, Maximum 150 words)

b.     Assume the Pakistan’s economy is in recession: Pakistan implements a combination of expansionary fiscal and monetary policy. In the absence of complete crowding out what will be the effect of these policies on each of the following: (2.5 Marks, Maximum 150 words)

           i. Aggregate demand in Pakistan

           ii. The price level in Pakistan

           iii. Interest rates in Pakistan

COVID-19 all around the world has restricted the economic activity. To stop the spread of the virus Pakistan like many other countries adopted the policy of smart lockdown. Shutting down of the industry has created adverse supply shock in the economy. While, the slowdown in business and economic activities the country is in the recessionary phase of the business cycle as the GDP growth for the FY 2020-21 is expected to be -0.2 accompanied by high unemployment and poverty rate.

a.      Reflecting on the above situation justify whether the State Bank of Pakistan should opt for easy or tight monetary policy as a stabilization policy. Also illustrate it graphically. 

b.      Reflecting on the above situation justify whether the Government of Pakistan should opt for expansionary or contractionary fiscal policy as a stabilization policy. Also illustrate it graphically.