Macroeconomics Answers

Jennifer divides her income between coffee and croissants(both of which are normal goods). An early frost in Brazil causes a large increase in the price of coffee in India.
a. Show the effect of the frost on Jennifer’s budget constraint.
b. Show the effect of the frost on Jennifer’s optimal consumption bundle assuming that the substitution effect outweighs the income effect for croissants.
c. Show the effect of the frost on Jennifer’s optimal consumption bundle assuming that the income effect outweighs the substitution effect for croissants.

Do you think markets are a good way to organize economic activity?Provide two real-world situations where government intervention in a market economy might improve the economy’s performance

In light of the following article explain why the producers are fuming against the reduction of price cap on the COVID tests. What impact will it have on the consumers? Explain using the impact on the society using appropriate diagrams.

Suppose you are the manager of a chain of computer stores. You closely follow the computer industry and you have just learnt that the government has passed a two-pronged program designed to enhance the country’s computer industry’s position in the global economy. The legislation provides increased funding for computer education in primary and secondary schools, as well as tax breaks for firms that develop computer software. As a result of the legislation, what do you predict will happen to the equilibrium price and quantity of software? Explain in detail with diagrams bringing out the difference between change in quantity demanded and change in demand.

How would the unemployment rate be affected in each of the following case?
Explain your answers by referring to the specific type of unemployment (frictional,
structural or cyclical unemployment) affected in each of the case.

a. A global pandemic badly hits Country X.
b. Some textile workers in Country X become jobless due to more imports of
textile products from Country Y. It is expected that after receiving training,
these workers can all find jobs in the retail sector.

A closed economy with household, business and government sectors. Individuals
receive income of k760 and pay taxes of k100 to the government: consumer spending
is k560: gross investment is k110: depreciation is k40: government spending is k130.

Question - Adam is the owner of a small grocery store in a busy section of Boulder, Colorado. Adam’s annual revenue is $200,000 and his total explicit cost (Adam pays himself an annual salary of $30,000) is $180,000 per year. A supermarket chain wants to hire Adam as its general manager for $60,000 per year.

a. What is the opportunity cost to Adam of owning and managing the grocery store ?
b. What is Adam’s accounting profit ?
c. What is Adam’s economic profit ?

1. Andrew operates a small shop specializing in party favors. He owns the building and supplies all his own labor and money capital. Thus, Andrew incurs no explicit rental or wage costs. Before starting his own business Andrew earned $1,000 per month by renting out the store and earned $2,500 per month as a store manager for a large department store chain. Because Andrew uses his own money capital, he also sacrificed $1,000 per month in interest earned on U.S. Treasury bonds. Andrew's monthly revenues from operating his shop are $10,000 and his total monthly expenses for labor and supplies amounted to $6,000. Calculate Andrew’s monthly accounting and economic profits.

There are twenty homes on Mukong Road. The installation of a streetlight would increase the value of each by N$10. The streetlight costs N$100 to install. Is the street light a public good? Why or why not? Should it be installed? Why? Who is more likely to install it the government or the property owners? Why? Would your answer be different if one person owned all the houses? (10 marks)

Assume (as a group adviser) you advise a small country whether to print their own money or use the money of its larger neighbor. How much would the national currency cost and benefit? Will the two countries have some role to play in this decision with relative political stability?

And Using this to classify a high inflation country over the past year and another low inflation country. For these two nations, it will find the rate of monetary development and the current level of nominal interest.