Macroeconomics Answers

You’re given the following information about the close economy with no government:

Congratulation = 115 + 0.6Y
Investment = 550
Use the above information to answer the questions that follows:

4.1 calculate the value of autonomous spending.
4.2 calculate the value of the multiplier.
4.3 calculate the equilibrium level of income.
4.4 is the equilibrium level of income also the full employment level of income? Explain your answer.
4.5 identify any three non-income determinants of consumption.

Q4: State why each of the following statements is true or false:
1. If the value of output by citizens outside the country is greater than the value of output by foreigners inside the country GNP will be less than GDP.
2. GNP may equal GDP.
3. GDP is the best measure of economic welfare.
4. GNP is the perfect measure of economic activity
5. GDP calculated by the value added method may equal GDP calculated by the final product
method.
6. In calculating GDP from the expenditure side. economists add imports to other aggregate
expenditure components.
7. If gross investment rose by $60 million there must be a replacement investment by the same
amount.

Which of the following is true regarding the national income accounts?
a. GDP>GNP
b. NNP>GNP
c. Personal Income>National income
d. Personal Income>NNP
e. Personal Income>Disposable Personal Income

Which of the following statements is correct?
A. At any point below the 45-degree line, aggregate spending is greater than production and income.
B. At any point below the 45-degree line, aggregate spending is less than production but greater than income.
C. At any point below the 45-degree line, aggregate spending is greater than income but smaller than production.
D. At any point below the 45-degree line, aggregate spending is less than production and income.

2 Identify any two reasons that US dollars would be demanded in South Africa

Year 1 GDP at current prices is 100
Year 2 GDP at current prices is110
Which of the following statements are correct?
A.The increase in GDP from year 1 to year 2 can be the result of an increase in the general price level.
B.The increase in GDP from year 1 to year 2 can be the result of an increase in real production.
C.From the given information, it is impossible to tell whether the 10% increase in GDP from year 1 to year 2 represents economic growth.
[1] All the statements are correct.
[2] a and b
[3] b and c
[4] a and c
[5] a

An increase in criminal activity in South Africa acts as a deterrent to foreign tourists
considering visiting South Africa, and as a result, there is a decline in the number of
American tourists to South Africa.
Explain, with the aid of a graph, the effect of this on the rand/dollar exchange rate
and the equilibrium quantity of dollars.

How each of the following events is likely to affect GDP?
a. Environmental laws prohibit the firm from emitting pollution.
b. Strikes by trade unions.
c. Discovery of new seed increases farm harvest.

Identify which of the following purchases is counted as a part of national income.
a. Toyota motors purchases tires from good year to equip new car.
b. Toyota motors purchases tires from good year to replace worn tires on executive company cars.
c. An individual purchases 50 shares of Microsoft.
d. You purchase a laptop from Pakistan.
e. Pakistan government gives scholarship to the students.
f. Employee contributes to retirement plan.
g. Suzuki company sells its product from its inventory.

give your own detailed explanation of liquidity preference theory and how the demand for money curve is determined. illustrate your answer graphically.