Macroeconomics Answers

4. “According to Ibbotson Associates, 20 – year government bonds are on track to post annual returns of 30% by the end of 1995. That would lag only the 40% returns of 1982 and 31% returns of 1985”

In 1995 the interest rate was far below 30%. How could 1995 returns on bonds be as high as 30%?

Quantity demanded for tea has increased from 100 to 160 units with an increase in the price
of the coffee powder from Rs. 40 to Rs. 50. Calculate the cross elasticity of demand between
tea and coffee and explain the relationship between the goods.

Suppose the monthly income of an individual increases from Rs. 10,000 to Rs. 15,000
which increases his demand for clothes from 20 units to 25 units. Calculate the income
elasticity of demand and interpret the result

evaluate foreign exchange rate theories and its effect on naira exchange rate

Assume after the economic crises, Greece had increased the tariff rates, which decreased the trade between Germany and Greece significantly. How would this affect the wage and supply of the skilled labor relative to unskilled labor in Germany and Greece, both in the short run and in the long run?

Starting with 1980’s economists within the neoclassical school have increasingly emphasize the
necessity of having a flexible labor market. One of the characteristics of the flexible labor market is increased level of mobility between sectors and occupations. Write a factor that can increase this kind of mobility within the labor market.

Write a factor that may increase the value of education.

Choose two occupations. Write which one should pay more according to the mainstream labor
market model and why. Explain your answer. (Your prediction may contradict with actual wage rate between those occupations. As long as your explanation is good enough, your answer will be OK.)

Starting with 1980’s economists within the neoclassical school have increasingly emphasize the
necessity of having a flexible labor market. One of the characteristics of the flexible labor market is increased level of mobility between sectors and occupations. Write a factor that can increase this kind of mobility within the labor market.

Assume gadgets are sold in a competitive market, the equilibrium price is $6, and the equilibrium quantity is 500 units.

Using the numerical values above, draw a correctly labeled graph of the market for gadgets and show the equilibrium price and the equilibrium quantity.