Macroeconomics Answers

How does exports and imports can benefit a company like Volkswagen in relation to resources, skills, capital,job creation and production line?

State whether each of following statements is “True” or “False” (Explain why if the
statement is false.)
A. When the GDP growth rate is 3% and its population growth is 4%, its GDP
per capita is higher.
B. Businessmen can make more profit by selling their goods in a country with a
higher GDP growth rate than a country with a lower GDP growth rate.

State whether each of following statements is “True” or “False” (Explain why if the
statement is false.)
a. A country with a greater GDP has a higher living standard than another
country with a lower GDP.
b. An increase in the nominal GDP of a country could be the result of an increase
in the price level or an increase in its output level.

Where Px is the price of ethyl alcohol, Pr represents the price of Isopropyl Alcohol, and Pw is the price of input used to produce ethanol. Given that the amount of ethyl alcohol sells at P40 per unit, isopropyl alcohol is sold for P35 per unit; and the price of inputs is P2,000. How much ethyl alcohol is produced?

3. Due to the health emergency crisis that recently emptied the coffers of the National Government, the privatization bureau is planning to privatize hundreds of government enterprises and properties. Suppose that you are one of the head-researcher of a government enterprise to be privatized, and the Director asked you the price and quantity that may sustain if the economy returned to normalcy. The best estimate for the demand-supply is at Qd = 100 - 10P and Qs = 10 – 5P. Find the equilibrium price and quantity.

US Country A
Personal consumption expenditures 67.86% 50%
Gross private domestic investment 17.5% 35%
Government consumption expenditures and gross investment 17.49% 10%
Exports of Goods and Services 11.73% 135%
Imports of Goods and Services 14.58% 130%
Net exports of Goods and Services -2.85% 5%


Businessmen concern about the economic environment of a country and its
business opportunities.
Which country is more likely to follow the principle of “Big Market, Small
Government”? Explain your answer. [4 marks]

Given the following equation U = √X1 X2, decompose the total effect of a price change

when the price of good one reduces by 10% from Ksh. 20. The income of the

consumer is Ksh.5000 per month while the price of good two is Ksh. 30

Personal consumption expenditures
Gross private domestic investment
Government consumption expenditures and gross investment
Exports of Goods and Services
Imports of Goods and Services
Net exports of Goods and Services

Which of expenditure components could be larger than the value of GDP for
an economy? Discuss the economic characteristic of such an economy.

suppose that a pair of events from problem 15 occur simultaneously. For each of the pair of events indicated below, perform a qualitative analysis to predict the direction of change in either the equilibrium price or the equilibrium quantity. Explain why the change in one of these two variables is indeterminate.

Using an IS-LM model, AD-AS model, and a Phillips curve, explain the impact of an increase in oil prices on the economy. Analyse the short run impact on real output, employment, prices, and real interest rates. Be sure to explain how it is possible to have an increase in the rate of unemployment while simultaneously experiencing an increase in inflation. Suppose that this increase in oil prices was permanent. What are the long run effects on the economy?