Macroeconomics Answers

Economic indicators used to measure each macro economics objective

The economy is at full employment. now the government wants to change the composition of demand towards investment and away from consumption without, however, allowing aggregate demand to go beyond full employment. what is the required policy mix? use the IS-LM diagram to show your policy proposal

where did the 100 came from??CPI 2016 base year

Suppose China exports TVs and uses the yuan as its currency, whereas Russia exports vodka and uses the ruble. China has a stable money supply and slow, steady technological progress in TV production, while Russia has very rapid growth in the money supply and no technological progress in vodka production. On the basis of this information, what would you predict for the real exchange rate (measured as bottles of vodka per TV) and the nominal exchange rate (measured as rubles per yuan)? Explain your reasoning. (Hint : For the real exchange rate, think about the link between scarcity and relative prices.)

13. According to a study, the price elasticity of shoes in the United States is 0.7, and the income

elasticity is 0.9.

a. Would you suggest that the Brown Shoe Company cut its prices to increase its revenue?

b. What would be expected to happen to the total quantity of shoes sold in the United

States if incomes rise by 10 percent?

11. Why do you think that whenever governments (federal and state) want to increase rev-

enues, they usually propose an increase in taxes on cigarettes and alcohol?

12. Could a straight-line demand curve ever have the same elasticity on all its points?

In a closed economy

Y= c+i+g

C= 900+0.5(y-t)

I= 700-30r

T= 800

G= 1200

Md=Ms

Ms=1500

Mt=0.7y

Msp= -80r

Derive the IS and LM equations of the economy.( Express y as a function of r and assume p is fixed at 1.0)

Calculate the short run equilibrium values of y and r in the economy.

 Given P = 24 – 0.1Q, where Q = q1+q2 and q1 = q2, TC1 = 0.1q1 2 , TC2 = 0.05q2 2 , a) Determine the output and price of low-costfirm b) Calculate the profit of the low-cost firm c) What isthe profit maximizing price level the high firm would like to charge but that doesn’t realize in the market? d) Compare the profits of the price taker at its own profit maximizing output and low-cost firm’s output e) Show the results a to d graphically 

Find the marginal cost functions for each of the following average cost functions. a) AC = 1.5Q + 4 + 46 𝑄 b) AC = 160 𝑄 + 5 - 3Q + 2Q2