Macroeconomics Answers

Which of the following is correct.

A. The repo rate is a real interest rate.
B. The interest rate on a Banker's Acceptance is a long term rate.
C. There is a positive relationship between the price of financial instrument and its interest rate.
D. The primer rate is a nominal interest rate.

Which of the following is correct. If actual prices are higher than expected prices.

A. Employment will decrease.
B. Production costs will decrease.
C. Employment will increase.
D. Wages will decrease.

suppose government spending was increased by 10 units and that this increase was financed by a 10 unit increase in taxes. Would equilibrium income change or remain the same as a result of these two policy actions? If equilibrium income changed in which direction would it move, and by how much

The Covid-19 pandemic and the lockdown that followed have served as multiple shocks to the South African economy. The initial 5-week lockdown limited mobility of people and the availability of goods and services, leading to contractions in aggregate demand and supply. Policymakers have responded with expansionary fiscal and monetary policy. The government has implemented a R500bn support package and the Reserve Bank has reduced the repo rate and extended liquidity in the bond market. Apply any, or all, of the models that you have learned and explain the impact of the crisis and the policy reaction on the level of output, the interest rate and the price level in South Africa. Make use of graphs and explain the chain reactions and impacts in your own words.

Use Figure 2 to fully discuss the welfare effect of setting a minimum wage of R 13/hr above or below the equilibrium wage.

Melissa buys an iPod for $120 and gets consumer surplus of $ 80۔
What is her willingness to pay?

Consider a hypothetical economy characterized by the following behavioral equations. (5 point)
C=40-14r+0.2Y Md =30-100r
I= 24-4r MS=60 G=2000 P=2
a. Derive the equations of the IS and LM curves of the economy

Suppose that applying fertiliser to a crop in a particular region results in water pollution in a nearby water body, and that the pollution is of concern to the community. We could identify two different "optimal" fertiliser rates: one that is optimal from the perspective of the community as a whole (considering pollution) and one that is optimal for the farmer (ignoring pollution). How do these two rates compare?

At its current level of production a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm’s marginal cost curve crosses the marginal revenue curve at an output level of 1,000 units. What is the firm’s current profit? What is likely to occur in this market and why?

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.