Macroeconomics Answers

marcoeconomis Suppose that in Zambia, people consume only two goods, peas and beans. Suppose that John, a citizen in that country has an income of ZMW10, the price of beans is 20N per kg and the price of peas is 40N per kg. a) Suppose that John consumes 30 kg of beans. Assume that he wants to spend all his income, how many kg of peas is he going to consume? b) Assume that the price of peas falls from 40N to 20N. Assuming that John still consumes 30kg of beans, find the new quantity of peas. c) After the decrease in the price of peas to 20N, assume that Jonh is just as well off as he was in (a) if he has an income of ZMW7.6. However, with that income and the new price of peas he would have consumed 20 kg of beans. Find the quantity of peas he would have consumed in this case. d) Find the substitution effect on consumption of peas due to the decrease in the price of peas in (c). e) Find the income effect on consumption of peas due to the decrease in income in (c).

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A depreciation of the rand against the US dollar will lead to a decrease in
[1] the price of imported goods in South Africa.
[2] the price of South African products sold in the USA.
[3] the price of petrol in South Africa.
[4] the number of tourists from the USA visiting South Africa.

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An increase in the supply of dollars in the South African foreign exchange market can be caused by
1.more South African firms purchasing capital goods from the United States 2.An increase in the gold a price.
3. A decrease in economic activity in the United States.
4. More South African tourists visiting the United States.

You are the new Governor of State Bank of Pakistan after Reza Baqir. For each of the situations listed below, decide if you would use Easy-Monetary policy or Tight-Monetary policy.

Explain briefly the times when a demand curve moves. When is there movement along the demand curve? Provide examples from your personal or professional life where you believe a demand curve shifted. Provide an example of when there was a movement along the curve.

Suppose you are a senator writing a bill to index social society and pensions. That is, your bill will adjust these benifit to offset changes in the cost of living. Will you use the GDP deflator or the CPI? Why?

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A country’s balance of payments
[1] records all the economic activities which take place within the boundaries of the country.
[2] will show a deficit on the current account if the value of exports exceeds the value of imports.
[3] can afford a deficit on the current account if there is a positive balance on the financial account.
[4] records all the transactions in the rest of world.

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Which one of the following is most likely to increase the demand for US dollars on the South African foreign exchange market?
[1] a fall in the interest rates in the United States
[2] an expected decline in the value of the rand relative to the dollar
[3] a recession in South Africa
[4] a decrease in international tourism