Macroeconomics Answers

Given the following:
C = 2000 + 0.75Yd
T = 300
I = 320
G = 300
X = 300
M=100


a) Determine the equilibrium level of income using expenditure and injection-leakage approach

b) Determine the value of C at equilibrium level of income.

c) Calculate the equilibrium level of income when there is an increase in investment of 100 using expenditure and multiplier approach.

Given information for Country X as below:

Details
$ (million)
Consumers consumption =30
Net Investment=20
Government Expenditure=30
Export=20
Import=10
Depreciation=10
Indirect taxes=25
Subsidies=118


1)Calculate Gross Domestic Product (GDP) market price for Country X

2)Calculate Gross Domestic Product (GDP) factor cost for Country X

49. If inflation accelerates due to the increase in the price of oil (an import), the best policy to combat
such inflation in a country with a high unemployment rate, would be to...

[1] apply the supply-side policy that will increase aggregate supply, which will be illustrated by
a rightward shift of the AS curve.
[2] respond with demand management policy that will increase aggregate demand, which will
be illustrated by a rightward shift of the AD curve.
[3] implement contractionary monetary policy, illustrated by the rightward shift of the AD
curve.
[4] apply incomes policy, illustrated by a leftward shift of the AS curve.

Assume a closed economy and no government. Also assume consumption
C=50-0.8Yd and investment I=80
derive the equation for saving

Hi! I am writing a broad overview of the different economic theories focusing on Classical, Keynesian, and Monetarism. My understanding is the modern accepted view of inflation is an increase in the money supply that is not met by a proportionate increase in RGDP, prompting increase in pricing. However, I'm uncertain if all three theories accept this. I'm familiar with their stances on fiscal and monetary policy, but do all three theories accept this formula for explaining inflation?

Suppose that the following equations describe an economy.

Y = Cd + Id + G
Cd = 180 + 0.8(Y – T)
Id = 140 – 8r + 0.1Y
T = 400
G = 400
(Md/P) = 6Y – 120i MS = 6000 i = πe + r

Assume expected inflation πe = 0 and price level P = 1.

.If government purchases (G) increases to $440, everything else held constant, find new equilibrium for output and interest rate.
What are effects of fiscal expansion above on consumption and investment? find the new levels of consumption and investment.
Instead of increasing the government purchases G, find new equilibrium values for output and the interest rate if the central bank increases the money supply to 6600. What are the effects of monetary expansion above on consumption and investment,find the new levels of consumption and investment)?
Judging from your answers to the previous questions, what are the differences in the effects of expansionary fiscal and monetary policies above on Y, i, C and I?

Consider a two-period model economy populated with consumers that have the same income and the same preferences. There is also a government whose objective is to spend 60 in period 0 and 150 in period 1. This government can issue bonds in period 0. Each bond pays interest rate r. Consumers can also issue bonds at the same interest rate .Consumers’ optimal decisions, given r, imply that aggregate consumption C*0 is equal to2/3(Y0− T0) +2/3(Y1− T1)/(1 + r). Suppose Y0= 300 and that income is expected to remain at this level in period 1
a)define the competitive equilibrium of this economy
b) Show that, together, the three conditions given in a) imply that the equilibrium value of r is given by
r = (2(Y1-G1)/Y0-G0)-1.

Which one of the following statements is correct?

A. Foreign loans are made directly by the government and are not part of the BoP.
B. Exports represent a leakage from the expenditure flow.
C. If the exchange rate changes from $0.11 = R1, to $0.12 = R1, the rand depreciated.
D. When South Africans buy or sell shares on the New York stock exchange it is accounted for in the BoP.

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams

What determines the amount of output an economy produces? Explain briefly.