Macroeconomics Answers

Which of the following is a leakage from the circular flow of income and expenditure in South Africa?

Explain, with the aid of a graph, the effect on the rand/dollar exchange rate and the equilibrium quantity of dollars if there is a decrease in imports from the USA to South Africa.
In your answer comment on the effect of this on the current account balance as well as on domestic prices.
(Note: 5 marks for the graph and 5 marks for the explanation of the graph)

The monetary transmission mechanism can be depicted in the form of a graph or using symbols.
Explain, with the aid of symbols, the monetary transmission mechanism when interest rates increase
(Note: Prices and wages are variable.)
(10)
Q.3.2
Explain, using the AD‐AS model, how the South African Government can use fiscal policy as a tool to recover from the negative effects of this COVID‐19 pandemic.
Your answer must include the following:
 The description of the type of fiscal policy required; (4)
 An explanation of how the implementation of this tool will work their way
through the economy to achieve the desired effect; (6)
 The AD‐AS graph showing the implications of your recommendations. (5)
Marks will be awarded for your ability to integrate theory with the scenario

The following information is provided about an open economy with a government. Use the information to answer the questions that follow:
C = 450 + 0.4Y I = 350
G = 150
X = 70
Z = 35 + 0.1Y T = 0.15Y
Yf = 1550
Q.2.1 Calculate the level of autonomous spending in this economy.
(2)
Q.2.2
Calculate the size of the multiplier
(Note: Round your answer to two decimal places)
(4)
Q.2.3
Calculate the equilibrium level of income (Hint: use the multiplier method)
(2)
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Q.2.4
Q.2.5
Q.2.6
Question 3
Calculate the tax revenue to the government of this country when the economy (2) remains in equilibrium.
Calculate what the new equilibrium income should be if the government of this (6) country decides to cancel all taxes, implying the tax rate would now be 0%.
Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?

During the 2018 December holidays, many Americans came to South Africa to visit the various tourist destinations, exchanging their dollars for Rands to purchase goods. Explain, with the aid of a graph, the impact this had on the demand and supply of dollars and the exchange rate

a business firm sells good at price of RS 450.The firm has decided to reduce the price of good to rs 350.consequently, the quantity demanded for the good roes from 25000 units to 35,000 units. calculate the price elasticity of demand.

The economy of Omega operates according to Okun's law. Omega is currently
experiencing a recessionary gap of 2% of potential GDP. If the natural rate of
unemployment equals 6 percent, what is the actual rate of unemployment in Omega?

Q5 Consider the following data on Malaysia's GDP :
Year Norminal GDP (in billion) GDP deflator
2005 495,239 189
2006 546,343 197
a) what is the growth rate of norminal GDP between 2005 and 2006 ( note: the growth rate is the percentage change from one period to the next )
b) what is the growth rate of the GDP deflator between 2005 and 2006?
c)what was real GDP in 2005 measured in 1987 prices?
d) what was real GDP in 2006 measured in 1987 prices?
e)what was the growth rate of real GDP between 2005 and 2006?
f)was the growth rate of nominal GDP higher or lower than the growth rate of real GDP? Explain

UK’s real GDP was 1 360 trillion pounds [£] in 2009 and 1 434 trillion pounds in 2010. UK’s population was 191.5 million people in 2009 and 193.3 million in 2010.
Calculate.
(a) Economic growth.3

Consider the following numerical example of the simple Keynesian model with no government spending, taxes, or a foreign sector (all figures in R millions):
C = 100 + 0,9Y
I = 50
Answer the following questions.

(a) Use a graph to illustrate the equilibrium level of output.5

(b) Suppose the level of output that creates full employment in the economy is 1 800. Using the multiplier, determine the level of investment spending that would create full employment in this economy.5