Macroeconomics Answers

Suppose the IS curve for Fiji is Y = 2500-125i and the LM is Y = 1000+25i. Use Cramer’s rule to determine i* and Y*. Now suppose the Fijian Government increased spending by $100m. Determine the extent of crowding out of private investment and the increase in Ms required to dampen any crowding-out effect. You are given the following parameters: αG = 2.5, h = 65, k = 0.5, b = 50.

If the Central Bank is concerned about a decline in business investment,
a)What steps might it take to stimulate the economy?
b)What will be the impact on bank reserves?
c)What will be the impact on interest rates?

one major problem with national income is multiple counting, this occurs in product approach when intermediate goods added

is this true or false

Although the outbreak of the covid-19 has had adverse impact on the most economies, policy makers believe if is an opportunity developing countries to build their economies . To what extent do you agree with this statement ??

Several economists project a decline in GDP growth in many countries mainly to the outbreak of the covid-19 pandemic . To what extent do you agress with their projections?

Extract B (lines 9 - 11) states "The Bank of England's monetary policy committee loosened its monetary policy in an attempt to prevent a downturn in the economic cycle"

Explain how monetary policy might help to prevent a downturn in the economic cycle (10 marks)

) Give the definition of GDP and explain what items are not included in its calculation? b) How is GDP calculated using the expenditure approach? c) How is GDP calculated using the income approach? d) Research the concept of measuring GDP using the value added approach and provide a working definition? e) Explain the problem of "double-counting" and how it can be avoided in calculating GDP.

Explain in detail the process of Monetary Policy transmission of an increase in the cash interest rate. Use relevant graphs to describe how a Central Bank action on the interest cash rate ripple through the economy and lead to the target policy goal. (Three connected diagrams should be used: (1) money supply and demand (2) investment demand schedule (3) AS/AD diagram. Interest rates is the variable that connects the first and second diagram).

Convert to ECONOMICAL

A. Given that Donald Trump has a net worth of $3.1 billion, how many of this person would per needed to pay off the debt of $22 trillion?

B. Find the GDP of the following country: Egypt
List the year of the GDP and a source, then figure out how many times bigger the national debt $22 trillion compared to this country’s GDP?

a) Consider first the goods market. Say, consumption, investment and taxes all are dependent on income. Government expenditure is given.
C = c0 + c1 Yd
T = t0 + t1 Y
Yd = Y – T
I = b0 + b1 Y – b2 i
a) What is the multiplier?​​​​​​​​
Next, consider the money market as well, given by the equation M/P = d1Y - d2i.
b) What is the multiplier now? ​​​​​​​​
c) Compare the multiplier derived in part (a) and part (b). Explain in words. [Note: Diagram is not mandatory for this question, but will definitely help obtain additional marks if theory goes wrong.]