Macroeconomics Answers

In the simple Keynesian model, an increase of one dollar in autonomous expenditure will cause equilibrium income to increase by a multiple of this one dollar increase. Explain the process by which this happens using different approached of explanations..

What causes shifts in the real money demand curve

The equations in an economy are given as: C=Yd, Investment=320, Tax=300, Government expenditure=300, Exports=300-0.05Y.

a)Find the equilibrium level of income

b)Find the net exports at equilibrium level of income

By using the IS-LM model, if the demand for money is sensitive to interest rates and investments are not sensitive to interest rates. Monetary policy is more effective than fiscal policy. Right or wrong? Prove it

Assume that there is economy with increasing of government expenditure and interest rate and aggregate price level are endogenous. Please use graph to show the increasing by using:

b) IS-LM model

c) AD-AS model with the horizontal aggregate supply curve in the short run

(assume both cases initially started from natural level of income)

1)    Assume that Proton and Perodua will be working together through research and development in a joint project to produce an all-electric-vehicle for the Malaysian market. Suppose the project includes building a new assembly plant based in Malaysia. Show on a graph the effect of Proton or Perodua going to the loanable funds market to finance the new assembly plant. Explain the effect on the real interest rate, private saving, and investment. 

1)    Explain the meaning of purchasing power parity. Give an example of what will happen when purchasing power parity does not hold in two economies.

In the simple Keynesian model, an increase of one dollar in autonomous expenditure will cause equilibrium income to increase by a multiple of this one dollar increase. Explain the process by which this happens using different approached of explanations

Suppose that government spending was increased by 15 million and that this increase was financed by a 15 million increase in taxes. Would equilibrium income change or remain the same as a result of these two policy actions and why is it important? If equilibrium income changed, in which direction would it move, and by how much? Explain.

Suppose that initially equilibrium income was 200 units and that was also the full￾employment level of income. Assume that the consumption function is

C = 25 + 0.8YD

And that, from this initial equilibrium level, we now have a decline in investment of 8  units. What will be the new equilibrium level of income? What increase in government  spending would be required to restore income to the initial level of 200? Alternatively,  what reduction in tax collections would be sufficient to restore an income level of 200?