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Given the following model:
Consumption: C = 500 + 0.5Yd
Investment: I = 250
Government Expenditure: G = 100
Proportional Tax Rate: t = 0.1
Imports: M = 0.25Y
Exports: X = 50
(Note: There is no lump-sum tax)
- a) If the current level of output is 1000, what is the level of actual investment? (2 marks)
- b) Calculate the equilibrium real GDP (2 marks)
Given the following model:
Consumption: C = 500 + 0.5Yd
Investment: I = 250
Government Expenditure: G = 100
Proportional Tax Rate: t = 0.1
Imports: M = 0.25Y
Exports: X = 50
(Note: There is no lump-sum tax)
- a) If the current level of output is 1000, what is the level of actual investment? (2 marks)
- b) Calculate the equilibrium real GDP (2 marks)
When the government sets an effective price ceiling
1. increase the multiplier
2. increase due to a depreciation in the SA rand against its major trading partners.
3. increase as domestic interest rates decrease.
4. increase when the level of domestic income increases.
Derive savings function
Calculate equilibrium level.
Compute multipliers of investment and taxes.
Suppose investment rises by 100,find new equilibrium.
Suppose government reduces expenditure by 100,how much would national income rise?
If desired level of income is 2400, what level of government spending would be set?
C=85+0.5Yd
I=85 C=60
net tax T=40+0.25Y
What is equilibrium of National income
In your project you have been given the selected economic indicators with some links for your guidance. You are required to do the work only on selected indicators to examine the health of a country. After analyzing Pakistan and Indias Economic health, you have to compare and contrast between them. So, firstly explain each indicator with the help of world bank data for each country. Secondly, summaries your findings in few lines for each country. Lastly, Compare and contrast among them. There are more economic indicators than will be required for this project, no need to discuss those. Each economic indicator must be researched and have a thorough and in-depth analysis of that indicator. This is a simple and detailed project and should be completed with the website given. Remember that conclusion or final findings should be explained in few sentences at the end; otherwise your project will be considered as incomplete and you will be suffered with low marks.
Q.2.2 Your prescribed text explains that the money stock (M) can be determined endogenously or exogenously (i.e. there are two different approaches to determining the value of M).
Explain which approach is used in the South African macroeconomy.
The theory of the demand for money is based on John Keynes’ Liquidity
Preference Theory.
Give your own detailed explanation of liquidity preference theory and how the
demand for money curve is determined. Illustrate your answer graphically.
endogenously or exogenously (i.e. there are two different approaches to
determining the value of M).
Explain which approach is used in the South African macroeconomy.
