Macroeconomics Answers

Is it better to crack down on price gougers or spark a reform on counter-
productive laws instead?

3.3. Situation 3: Firm Y chooses a low-price strategy while Firm X maintains a high-price strategy. Result: Compared to Situation 1, Firm Y has an incentive to cut prices because it will earn $________ million and Firm X will earn $________. Compared to Situation 1, Firm Y will earn $________ million more in profit and Firm X will earn $________ million less in profit. Together, the firms will earn $________ million in profit, which is $________ less than in Situation 1.
3.4. Situation 4: Each firm chooses a low-price strategy. Result: Each firm will earn $________ million in profit for a total of $________ million for the two firms. This total is $________ less than in Situation 1.

Choose the correct answer
Which of the following policy action may cause policy dilemma?
[1] reducing the interest rate to boost investment and economic growth.
[2] Setting a lower price level to increase real wages in the economy.
[3] Appling policy measures to reduce population growth and unemployment.
[4] providing drought relieve to increase total production in the economy.

3.3. Situation 3: Firm Y chooses a low-price strategy while Firm X maintains a high-price strategy. Result: Compared to Situation 1, Firm Y has an incentive to cut prices because it will earn $________ million and Firm X will earn $________. Compared to Situation 1, Firm Y will earn $________ million more in profit and Firm X will earn $________ million less in profit. Together, the firms will earn $________ million in profit, which is $________ less than in Situation 1.
3.4. Situation 4: Each firm chooses a low-price strategy. Result: Each firm will earn $________ million in profit for a total of $________ million for the two firms. This total is $________ less than in Situation 1.

GDP at market prices R397bn
Net primary income payments to the rest of the world R37bn
Indirect taxes R23bn
Subsidies R11bn
Consumption of fixed capital R32bn
Q.3.2 Calculate the value of net national product (NNI) at market prices

Which of the following statements is incorrect?
[1] Induced consumption does not require income.
[2] People always consume even if income is zero.
[3] Consumption increases by less than the increase in income.
[4] There is no relationship between consumption and interest rates.

The information below relates to a closed economy without a government. use the information to answer the questions that follows. Autonomous spending R285 million, Autonomous investment R300 million, marginal propensity to consume 0.4.
1. Calculate the level of autonomous spending.
2. Calculate the size of the multiplier.
3. Calculate the equilibrium level of income.
4, Suppose the equilibrium level of income is 1000 and it is below the full employment level of income of 1200. Calculate the change in investment spending required to reach full employment.

Kenya has a comparative advantage over Uganda in the production of sugar if it:
(1) Is able to produce sugar at a faster rate than Uganda.
(2) Produces sugar at a lower opportunity cost than Uganda.
(3) Has the absolute advantage in sugar production.
(4) Specialises in sugar production.