Macroeconomics Answers

At a personal level, what kind of questions can macroeconomic help you amswer?

Annie runs a fitness center. On December 31, 2014, she bought an existing business with
exercise equipment and a building worth $300000. During 2015, business improved and
she bought some new equipment for $50000. At the end of 2015, her equipment and
buildings were worth $325000. Calculate Annie’s gross investment, depreciation, and net
investment during 2015.

If GDP is less than GDE, then

1. the country has a surplus on the current account
2. exports are less than imports
3. the country is consuming less than it is producing
4. the country is a net export

Suppose investor A has $20,000 in his account and derives 4 utiles of Utility from this amount and would derive 5 Utiles of Utility if he had $40,000. He is faced with a choice to invest the $20,000 in a project that has 60% probability of earning a profit of $20,000 and 40% probability of losing $20,000?

Is the manager likely to invest in the project?

A project has expected risky cash flows of $45,000 in Perpetuity. Given that the risk adjusted rate of return for the project is 15%, and the risk free rate is 5%, What are the certainty equivalent cash flows in perpetuity?

The demand Curve facing a firm operating under monopoly is given by P = 85 - 2.5Q; The cost function is given by TC = 20 + 25Q + 2,5Q^2.

1) What is the Maximum profit?

2) What is the Profit Maximizing Price Elasticity of demand?

3)What is the Revenue Maximizing Price elasticity of demand?

You are given that the equilibrium price and quantity of a product A are $30 and 2Kg respectively. 1)What is the marginal revenue when the price elasticity of demand is -3?
2)What is the Marginal Revenue when the quantity is 4?

You are given that the equilibrium price and quantity of a product A are $30 and 2Kg respectively. What is the marginal revenue when the price elasticity of demand is -3?

1. Which of the following statements are correct?
a. Macroeconomics studies the determination of the level of output and income for a specific firm.
b. In macroeconomics we focus on the interaction between different markets, such as the goods market, the financial market, the labour market and the foreign exchange market.
c. Real GDP per capita is widely used as a measure of economic welfare or wellbeing of the residents of a country.
d. The main instrument of fiscal policy is the budget, while the main policy variable is the interest rate.
e. A contractionary monetary policy implies a decrease in government spending and an increase in taxation.
1. a, b and c
2. b, c and d
3. b, d and e
4. Only b and c
5. b, c and e

2) An increase in autonomous consumer expenditure causes the equilibrium level of
aggregate output to _____ at any given interest rate and shifts the _____ curve to the
_____.
(a) rise; LM; right
(b) rise; IS; right
(c) fall; LM; left (d) rise; IS; left

Are interest rates and bond prices related?