Macroeconomics Answers

Suppose the market demand function for a good is given by.
Q=-5p+1000
i. find the monopolist’s total revenue function
ii. Find maximum total revenue

What are the effect of COVID-19 on transport sector

A firm sells its output in a perfectly competitive market at a fixed price of R200 per unit. It
Buys the two inputs K and L at prices of R42 per unit and R5 per unit respectively, and faces the production function
q = 3.1K0.3L0.25
What combination of K and L should it use to maximize profit?

3- Consumption basket consumed by an average consumer and the price level of each good in the basket for 2019 and 2020 in Berberistan are given below; (Take 2019 as a base when necessary) (20 pts)


Price levels

quantity
2019
2020
Coffee
4
5
8
Tea
5
4
5
Cheesecake
10
10
15

a) Calculate the CPI value for 2019.
b) Calculate the CPI value for 2020.
c) Calculate inflation rate from 2019 to 2020.


4- Explain the effect of an improvement in productivity on potential real GDP and real GDP per capita using macroeconomic production function and labor market equilibrium. (20 pts)






5- We have the following data from loanable funds market for Berberistan. Answer the following questions. (20 pts)

Real interest rate
Loanable funds demanded
Loanable funds
supplied
(percent per year)
(trillions of dollars)
3
10
4
4
9
5
5
8
6
6
7
7
7
6
8
8
5
9
9
4
10

A nation’s gross domestic product is

The economy of Lebanon, exhibits the following information.
Which of the following should be included in 2015 GDP? In case it shouldn’t, then explain the
reason.
a. $2000 earned by Lebanese Lawyers in Lebanon 2014.
b. $1000 earned by Egyptian workers in Lebanon in 2015.
c. $5000 earned by Lebanese firm opens a production facility in Bekaa in 2015.
d. $1500 worth of paper all used in Books production during 2015 in Lebanon.
e. 10 kilos of tomatoes a household has harvested from his garden in 2015.
f. $10,000 government unemployed benefits transferred to those who are unemployed in
2015.

Explain the relationship between profit maximization condition and the labor demand as shown by equation
MPNi=W/P

Suppose that the money market in Westlandia is initially in equilibrium and the central bank decides to decrease the money supply.
1. Using a diagram like the one in Problem 7, explain what will happen to the interest rate in the short run.
2. What will happen to the interest rate in the long run?

Based on the international trade effect, how would an increase in the price level in South Africa affect the exchange rate and aggregate demand?

Aggregate spending will increase if....?

The cost of production in the South African economy accelerated due to rising prices of electricity and petrol in the country which led to increase in the prices of domestic goods and services relative to foreign goods and services. This will likely lead to a (n)......

If the government decides to increase personal income tax to raise its tax revenue, what will be the impact on the economy?

Assume an economy does not trade with the outside world. In a given fiscal year, household spent 80% of their disposable income on consumption in addition to 600 consumption expenditure which is independent of income. Total government expenditure of 900 was supposed to be financed from a proportion tax levy of 40% on national income and a lump sum tax of 450. Total private investment spending is 700. Given that aggregate output is equal to aggregate spending.
1.Determine the value of the multiplier.
2. Find the equilibrium level of output