Macroeconomics Answers

Questions 52 and 53 are based on the following table showing the key labour market indicators in
South Africa:
Number of persons (‘000)
Population 15-64 yrs 38 134
Labour force 22 668
Employed 16 529
Unemployed 6 139
Discouraged work-
seekers
2 841
52. The unemployment rate (using the strict definition) in South Africa is… (rounded to two decimals
after the comma).
[1] 54,33%
[2] 35,20%
[3] 37,14%
[4] 27,08%
53. The unemployment rate (using expanded definition) in South Africa is… (rounded to two
decimals after the comma).
[1] 54,33%
[2] 35,20%
[3] 37,14%
[4] 27,08%

How to calculate real GDP?

Suppose there is a monopolist in the market for a specific video game facing a demand curve: P = 34 - 0.5Q. The monopolist marginal cost curve is MC = 2, its total variable costs are TVC = 2Q and it faces a total fixed costs equal TFC = $294.
Note: Keep as much precision as possible during your calculations. Your final answer should be accurate to at least two decimal places.

a) Graph the demand curve and marginal cost curve, then derive and graph the marginal revenue curve.

b) Calculate the equilibrium monopoly quantity and price.
c) What is the profit for the monopoly?
d) What is the consumer surplus?

Suppose the central bank's monetary policy sets the interest rate according to the function:
i = 2 + 2(π - π*) with π* = 2,
and aggregate expenditure is:
AE = 140 + 0.2Y - 10i

a) What is the equation for the ADπ curve? Use 'PI' to represent π when entering your equation.

b) Plot the ADπ curve in the graph below.

Landlords show up at the next council meeting and demand an increase in rents. The council members (concerned about their upcoming re-election campaigns) vote to repeal the price ceiling and instead replace it with a price floor that is RM50 above the equilibrium price. what is the new market price? how many two bedroom apartments will be rented?

a) Landlords show up at the next Council meeting and demand an increase in rents. The
Council members (concerned about their upcoming re-election campaigns) vote to repeal
the price ceiling and instead replace it with a price floor that is RM50 above the equilibrium
price. What is the new market price? How many two-bedroom apartments will be rented?

Rohan is appointed an economics’professor in a reputed university. In his first lecture,
students asked him to elaborate on Gross Domestic Product (GDP) and Gross National
Product(GNP). Help Rohan to prepare his first lecture on the given topic with relevant
example and highlight the differences between the two concepts.

1. Consider an economy that is described by the the following behavioural equations:
C = c0+c1(YT) T = b0+b1Y
G = G0
I = I0 NX = 0
0 < b1<1
a. Solve for the quilibrium output, and equilibrium consumption.

Explain how rational expectations are best expectations. Also explain the disadvantages of adaptive expectations.

What are the findings of Simon Kuznets about consumption and income? Explain how are these findings explained by different consumption theories?