Macroeconomics Answers

Suppose the reserve requirement for all banks is 20 percent and the nation’s banks initially have no excess reserves. Suppose you find US$ 1 million of old currency in your grandmother’s attic and deposit it into her bank checking account. Calculate: (14 %)

The change in reserves in your grandmother’s bank.

The change in required reserves in your grandmother’s bank.
The change in excess reserves in your grandmother’s bank.
The maximum amount by which your grandmother’s bank can expand its loans.
The maximum amount by which the entire banking system can expand its loans.
The potential expansion in the nation’s deposits resulting from the initial deposit in your grandmother’s bank.
The potential expansion in M1.

Take any two commodities & their utility with hypothetical (Imaginary) figures & draw indifference curve. If your income increases by 50% then which commodity’s consumption will you increases & why? Draw a new indifference curve with increased utilities of the commodity/commodities whose consumption you have increased?

With the following information calculate the GDP for the nation of NORA



The country's spending on consumer goods and services was $60
Businesses invested $10 and built up their inventories of goods $5
The Government of NORA spent $25 on goods and services and made $10 of transfer payments
NORA exports $15 of goods and services while importing $15

10). When the Solow economy is dynamically efficient an increase in the saving rate
A. definitely decreases consumption per efficient worker in the steady-state
B. definitely increases consumption per efficient worker in the steady-state
C. may lead to no change in consumption per efficient worker in the steady-state
D. has an ambiguous effect on capital per efficient worker in the steady-state

7). When the saving rate is equal to the capital income share in the Solow model
A. the elasticity of consumption per effective worker with respect to saving rate is 0
B. the steady state level of capital per efficient worker is 0
C. there are no reasons for the benevolent social planner to change the saving rate
D. there is no possibility to increase consumption per efficient worker
8). When the stock of capital per efficient worker is greater than that of the golden rule level
A. the economy cannot be in the steady state
B. the economy is dynamically inefficient
C. the economy grows faster
D. the economy is dynamically efficient
9). The Solow model predicts that an increase in the private saving rate has
A. NO temporary level effect on consumption per worker
B. NO permanent level effect on consumption per worker
C. NO temporary growth effect on consumption per worker
D. NO permanent growth effect on consumption per worker

4). The AK model predicts that changes in the private savings rate have NO
A. permanent level effect on consumption per worker
B. temporary growth effect on consumption per worker
C. effect on the transition time needed to reach the new balanced growth path
D. temporary level effect on consumption per worker
5). When the Solow economy is dynamically inefficient
A. the slope of the break-even investment line is greater than the marginal product of capital
B. the break-even investment line does not cross the actual saving line
C. the slope of the break-even investment line is equal to the marginal product of capital
D. the slope of the break-even investment line is smaller to the marginal product of capital
6). The balanced growth path of the Solow model with positive technological progress features
A. a constant share of output going to labour
B. a decreasing share of output going to capital
C. a constant ratio of the labour stock to GDP
D. an increasing share of output going to capital

1). The balanced growth path of the Solow model with positive technological progress features
A. an increasing ratio of the labour stock to GDP
B. a constant ratio of the capital stock to GDP
C. a decreasing ratio of the capital stock to GDP
D. a constant ratio of the labour stock to GDP
2). The balanced growth path of the Solow model with positive technological progress features
A. a decreasing marginal product of labour
B. a constant marginal product of labour
C. an increasing marginal product of labour
D. a constant average product of labour
3). In the Solow model the golden rule level of capital per efficient worker is
A. that all the labour income is consumed
B. when the marginal product of capital is equal to the saving rate
C. when the output elasticity with respect to capital is equal to zero
D. that maximises consumption per efficient worker in every point in time

Crowding out reduces the degree to which a change in government purchases influences the level of economic activity. Is it a form of automatic stabilizer?

1Theoretically, and graphically, explain Steady State level of capital and Golden Rule level of Steady State capital as technological progress is occurred in any developing economy in the long run