Macroeconomics Answers

Identify whether the following cases mention in part 1 to 5 .represent an aggregate demand shock or aggregate supply shock graphically sketch the impact of each shock AD-AS frame work. And discuss the role of stabilization policy can play in each case to counter the shock.

1)people leaving the economy have become inclined to hold the money due to lack of trust on financial market which provide alternative mean of keeping their money

2)drought has struck the economy badly and have major distruction to the yield of many crops.

3)central bank decide to increase money supply

4)firm decide to provide capital units to the labour they employed.

5)if the specific economy is subject to energy crises.

using AP/AE graphs, describe how policy makers will correct a $50000 recessionary gap with tax policy and with government spending. Assume an MPC OF .2

How developed economic country can help poor countries to develop

Using suitable diagram explain impact of following on equilibrium:

Decrease in income where X is inferior good

Identify and analyse the advantages and disadvantages, from the viewpoint of different groups in society, of the market structure of perfect competition relative to the market structure of monopoly.

) If the marginal propensity to consume is 0.5, find by how much government

Spending would have to rise in order to raise output by Kes 1,000 billion

Q2. If a local newspaper reported that the Malaysian government will shore up the sliding ringgit by working to cut record budget and trade deficits.

a) According to the model in this chapter, would a reduction in the budget deficit reduce the trade deficit? Would it raise the value of ringgit? Explain.

Q2. If a local newspaper reported that the Malaysian government will shore up the sliding ringgit by working to cut record budget and trade deficits.

a)   According to the model in this chapter, would reduction in the budget deficit reduce the trade deficit? Would it raise the value of ringgit? Explain.

The following graph shows the demand curve for uff, a useful commodity produced on the planet Hermes. The Hermetian currency is the yen. The graph input tool also shows how demand for uff is affected by changes in the average income of Hermetians, as well as the prices of tulg and snick, two other related goods available on the planet

evaluate the impact of government policies on a named economy you have chosen, in a period of time you have specified.