Macroeconomics Answers

Consider the production function which satisfies the constant returns to scale. When K = 10, L = 5, H = 20, N = 30, and A = 1, the production level was 100. How much was the labor productivity? If K changed to 30, L changed to 15, H changed to 60 and N changed to 90 (and no change in A), how much would be the labor productivity after the change?

Labor productivity:

Labor productivity after the change:

Equilibrium level of income is that at which

Suppose the government decides to pursue an expansionary fiscal policy. Within the AD-AS framework, what will be the impact on the economy?

1. Assume an economy where spending for each sector is:

Household: C = 800 + 0.95Qd

Business: I = 3000

Public: G = 4000, Tr = 7000, Tx = 1000 + 0.3Q

Foreign: X = 1700, Im = 200 + 0.165Q

Solve for:
a) Autonomous Spending
b) Spending Multiplier
c) Disposable Income
d) Consumption Expenditure
e) Household Savings,
f) Imports
g) Net Exports
h) Government Expenditure
i) Budget Deficit

2.) Continuing with the previous problem, what happens to the values in parts a-i if we increase Government Purchases by 1500?

3.) Continuing with 2, what happens if Investment Spending decreased by 500?

4.) Continuing with 3, what happens if exports also decrease by 500?

Quantity Price Total Revenue Average Revenue Marginal Revenue
1 $35 $35
2 $64 $32 $29
3 $29
4 $17
5 $23 $11
6 $120
7 $17 –$1
8 –$7
9 $99 $11 –$13

Refer to Table 15-1. Assume this monopolist's marginal cost is constant at $11. What quantity (Q) of output will it produce and what price (P) will it charge?

A.Which of the following best describe economic growth 1.An increase in real GDP per Capita over time,where GDP per capita is real output divided by population 2.An increase in the value of final goods and services produced within the borders of the country in a one-year period 3.A sustained increase in nominal GDP occurring over time 4.An absolute change of real GDP or real GDP per capita over time B.in the AD-AS model,an expansionary fiscal policy may lead to a ...1 rightward shift of aggregate demand and demand-pull inflation 2.Leftward shift of aggregate demand and demand-pull inflation 3.Rightward shift of aggregate supply and cost-push inflation 4.leftward shift of aggregate supply and cost-push inflation

A.The original Philips curve....1.indicates the inverse relationship between the inflation rate and the unemployment rate2.illustrate the positive relationship between the inflation rate and the unemployment rate3.shows the phenomenon of stagflation 4.shifts to the right when aggregate demand increases.B.To reduce structural unemployment in South Africa,the government should...1.take steps to reduce population growth 2.apply stricter immigration control 3.raises taxes and increase government spending to boost aggregate demand 4.make education and training available to everyone who is will to improve their skills.

A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972. A college graduate in 2018 found a job paying $50,390. The CPI was 0.2511 in 2018.

Calculate real income for 1972
Calculate real income for 2018
Calculate growth rate of nominal income between 1972 and 2018
Calculate growth rate of real income between 1972 and 2018

A.Which of the following best describe the relationship illustrated by the aggregate demand (AD)1.The inverse relationship between price and quality demanded for any product 2.The negative relationship between the price level and levels of total production3.It shows non relationship between the price level and real GDP demanded B.Aggregate spending will increase if...1.real wealth falls 2.interest rate falls 3.consumption falls 4.investment falls C.If the AS curve shifts to the left as productivity decreases, it will result in a combination of...1.lower output,higher unemployment and higher inflation 2.lower output, lower unemployment, and lower inflation 3.higher output,lower unemployment,and lower inflation 4.higher output, higher unemployment, and higher inflation.

A.To boost economic growth the government is most likely to....1.reduce personal income tax.2increase taxes.3provide incentives to save(eg..tax-free investment)4.increase minimum wages in the private sector. Unemployment can decrease if....1.there is economic recession 2.education system improves.3investment spending increases. 4aggregate demand decrease.C.To be counted into the pool of unemployment a person must be :1.any age above 15 years 2.discouraged work seeker 3.economically active 4.hired and looking for a second job.