Macroeconomics Answers

In the Keynesian macroeconomic model, the equation for the savings function is given as: S = -420 + 1/4Y. Based on this information, which of the following statements is correct?

(a) The marginal propensity to consume is ¼;

(b) The level of autonomous savings is 420;

(c) At an income level of R1 000, the value of savings is 250.

(d) At an income level of R1 000, the level of savings is -170.

If total output (production) remains the same and all prices double, then real Gross Domestic Product (GDP):

(a) Is constant and nominal GDP doubles;

(b) And nominal GDP are both constant;

(c) Is constant and nominal GDP is reduced by half;

(d) Doubles and nominal GDP is constant.

In the event of high levels of inflation, the government can:
(a) Implement a restrictive fiscal policy by raising interest rates;

(b) Implement a restrictive fiscal policy by decreasing interest rates;

(c) Implement a restrictive fiscal policy by raising tax rates and decreasing government expenditure;

(d) Implement a restrictive fiscal policy by decreasing tax rates and increasing interest rates.

What is the role of the treasury as it relates to fiscal policy

Out of 20 million people in the population, 9 million people are in the labour force and 3 million are unemployed, therefore the unemployment rate is?

a) Why might it have been useful for Nintendo to calculate the cross-price elasticity of demand for its 16-bit systems and CD accessories?

Construct a discussion on the different ways that government intervenes in your country. Support your discussion by citing real life examples of such intervention from reliable sources.

Conduct your own research on the 2018/ 2019 budget and fiscal policy in South Africa. Provide your own detailed analysis of the fiscal policy.

1. Compute nominal GDP in each year using 2017 as the base year.

2017 2018 2019

price/unit Total quantity price /unit total quantity price total quantity

good A 30 900 35 1,000 34 1,050
good B 120 192 140 200 136 205
good C 95 450 85 750 102 550


Question No 2: compute the GDP deflator in each year and Use it compute the inflation rate from 2017 to 2018, and from 2018 to 2019.

Question No 3: On the basic of data provided, Use 2018 as base year and
compute (CPI) for each year. Compare the results of inflation rates computed in Qus No 2 and 3.

Given what you have done so far, can you write the equation to show national income equilibrium using symbols and letters (you will need to work out which is which)! below? There are 2 'red herrings' thrown in to make you think!
+ - = I X M S T G