Macroeconomics Answers

It is observed that countries like the US invest in the research and development of new drugs, giving rise to monopoly like situation to their pharmaceutical industry when a new medicine molecule is innovated. This may continue for about five years. Later, during the next five years, pharmaceutical firms in countries like India either imitate this innovation or invest in similar research and development of substitute drug molecules. At the end of such time period, countries like India are in a position to produce a close substitute to the original medicine at a much lower cost. Production picks up over time and then the firms from the imitating country capture the international market.
Explain the process of international trade between innovating country and imitating country with an appropriate diagram, showing the timeline (in number of years) across various phases on the X-axis. Assume that each stage lasts for about five years.

how is the forward looking monetary policy different from its backward looking counterpart? what is the divine coincidence and why is it difficult to implement?

Suppose Canada imposes high tariffs on Japanese automobiles. The intention is to make autos produced in Japan so expensive for Canadians to buy that they choose instead to purchase autos constructed in Canada. Advocates of the policy contend this will create new employment in Canada. Assuming the Bank of Canada maintains a flexible exchange rate, will this trade policy prove effective? Explain thoroughly. What if the Bank of Canada maintains a fixed exchange rate, how would be your answer? Explain thoroughly.

Suppose the reserve ratio is 20 percent, banks do not hold any excess reserves, people hold only deposits and no currency. Then the Fed buys $10 million worth of government bonds from banks. By how much and what direction do reserves change?

What type of money is toilet paper? Your options are: commodity, commodity-backed or fiat money.
What function of money is toilet paper performing? Your options are: medium of exchange, unit of account or store of value.

With the aid of a diagram, discuss the welfare effect of this new legislation if the new minimum
wage is (1) below the equilibrium wage and (2) above the equilibrium wage rate with labour
hours as your quantity variable.

Consider the following.
Government spending = R550
Exports=R330
Autonomous consumption =R280
Autonomous imports =R170
Investment expenditure=R120
Marginal propensity to consume = 0,75
Full employment level of income =R5700

A. Autonomous expenditure is equal to (1)R900 (2)R960 (3)R1040 (4)R1110
B. What is the marginal propensity to save? (1)1 (2)1.60 (3)0.25 (4)0.40
C. What is the value of the multiplier? (1)2 (2)2.50 (3)4 (4)3
D. What is the equilibrium level of income Y*? (1)R5120 (2) R4440 (3)R4400 (4) R5260

In each of the following cases, determine how much GDP and each of its components is affected (if at all):
Michael spends $700 on Christmas dinner for his employees to celebrate company's financial success in 2019.
In January 2020, Michael & Associates bought new computers for the office staff totaling $10,000. The computers were built in Germany.
The computers bought by Michael & Associates in January 2020 for the office staff were last year's (2019) model.
Ford Motors built cars worth $800 million in 2019, consumers only bought $500 million worth of cars.

What is economic growth...??

A. 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