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Macroeconomics
Give three reasons for government intervention in the economy
Macroeconomics
Solow model assumes other things remain the same, certain variables can explain the difference in GDP per capita, investment rates etc. Across the countries:
Choose two countries one rich other poor. From World development Indicator: take the data on the GDP per capita and then take variables given by Solow model and explain the difference in the income per capita between the specific countries you have chosen, which according to you is most responsible for the observed difference.
Choose two countries one rich other poor. From World development Indicator: take the data on the GDP per capita and then take variables given by Solow model and explain the difference in the income per capita between the specific countries you have chosen, which according to you is most responsible for the observed difference.
Macroeconomics
Explain how rational expectations are the best expectations. Also explain the disadvantages of adaptive expectations.
Macroeconomics
C = 120 + 0.75 Yd,
I = 250 + 0.3 Y - 5i,
T = 50 + 0.15Y,
G = 900,
X = 550,
M = 90 + 0.3Y,
Md = 8Y - 2i,
Ms = 2000,
C = consumption,
Yd - disposable income,
I – investment spending,
i - interest rate,
T - tax income,
G – government spending,
X – exports,
M - imports,
Md - money demand and
Ms - Money supply.
Please derive the IS and LM Equation from the above information.
Macroeconomics
Consider the current situation of covid 19 and government rejoinder to the situation which has been through plummeting taxes. Using the IS-LM framework show the impact of this policy under the following assumptions.
1.government keeps interest rates constant
2.the money stock remains unchanged
1.government keeps interest rates constant
2.the money stock remains unchanged
Macroeconomics
4. The circular flow of income and spending reveals that an increase in South African exports will…
[1] increase spending on South African imports by more than the spending on exports.
[2] increase income to South African economy and increase income to South African producers
of goods and services.
[3] increase income to foreign firms and increase income to foreign factors of production.
[4] decrease output and income in the rest of the world.
[1] increase spending on South African imports by more than the spending on exports.
[2] increase income to South African economy and increase income to South African producers
of goods and services.
[3] increase income to foreign firms and increase income to foreign factors of production.
[4] decrease output and income in the rest of the world.
Macroeconomics
5. Which of the following statements about stock and flow variables is/are true?
a) Interest earned is a flow variable.
b) The number of people who enter the unemployment pool is a stock variable.
[1] both a and b are correct
[2] only b is correct
[3] a is correct and b is incorrect
[4] both a and b are incorrect
a) Interest earned is a flow variable.
b) The number of people who enter the unemployment pool is a stock variable.
[1] both a and b are correct
[2] only b is correct
[3] a is correct and b is incorrect
[4] both a and b are incorrect
Macroeconomics
7. We can expect that the amount of money that a bank create will decrease when…
[1] more bank clients choose to deposit their funds at the bank.
[2] the bank's clients choose to hold a smaller part of their money in the form of cash.
[3] the bank borrows from the South African Reserve Bank.
[4] the South African Reserve Bank increases the repo rate.
[1] more bank clients choose to deposit their funds at the bank.
[2] the bank's clients choose to hold a smaller part of their money in the form of cash.
[3] the bank borrows from the South African Reserve Bank.
[4] the South African Reserve Bank increases the repo rate.
Macroeconomics
8. Suppose there is an increase in the total remuneration earned by the factors of production. How
this will influence the demand for money?
[1] The demand for active balances will increase and shift L2 to the right.
[2] The demand for transaction purposes will increase and shift L1 to the right.
[3] The demand for passive balances will decrease and shift L1 to the left.
[4] Speculative demand for money will decrease and shift L2 to the left.
this will influence the demand for money?
[1] The demand for active balances will increase and shift L2 to the right.
[2] The demand for transaction purposes will increase and shift L1 to the right.
[3] The demand for passive balances will decrease and shift L1 to the left.
[4] Speculative demand for money will decrease and shift L2 to the left.
Macroeconomics
12. Which one of the following statements regarding taxation is correct?
[1] Neutrality of tax means that compliance and administration costs are kept as low as possible.
[2] Taxes which induce taxpayers to change their behaviour are not neutral.
[3] The aim of taxes is to distort relative prices and change the behaviour of taxpayers.
[4] The tax burden is spread equally amongst taxpayers.
[1] Neutrality of tax means that compliance and administration costs are kept as low as possible.
[2] Taxes which induce taxpayers to change their behaviour are not neutral.
[3] The aim of taxes is to distort relative prices and change the behaviour of taxpayers.
[4] The tax burden is spread equally amongst taxpayers.
