Macroeconomics Answers

2. Apply your knowledge of the AD/AS model to predict the effect on economic variables (i.e., P, RGDP, interest rates, wages, savings and spending) of some events on the U.S. economy. Diagram the effect of the following events. Be sure to explain the effects in the short run and effects in the long run for each question, in words. To keep things clear, assume that in each case the economy starts out at long-run equilibrium.
c. The government increases both taxes and spending by $500 billion. The money is spent domestically. Hint: Be sure to provide a strict interpretation of the AD/AS model as part of your answer.

1) i. A perfectly competitive firm produces 1,000 units of burger in marginal revenue is RM6. Calculate the firm's average fixed cost, long-run average cost, total and total profit.
ii. Plot a graph for a competitive market in the short run
2) For each of the statements below, plot a graph to show the firm's profit or loss (if any).
i. A profit-maximizing monopoly in the short run making a positive economic profit.
ii. A loss-minimizing monopoly in the short run which has shut down.
iii. A loss-minimizing monopoly in the short run that is operating but losing money.

How are each of the below objectives measured?

Objective1: Equitable or Redistribution of Wealth (Income)
Objective 2: Price Stability
Objective 3: External Stability or Balance of Payments

1. You have to determine the optimal number of trucks that the company should buy in order to use them in their projects. Let denote "Y" as the number of trucks. The Marignal Benefit to the company is given by the expression: MB = 80,000 - Y.
The Marginal Cost given by the expression: MC = 10,000 + (1/2,000)Y2

a. Please calculate the optimal amount of trucks that this company should buy and include a diagram.

b. Provide some reasons that might explain the slopes of the marginal benefit and marginal cost curves.

c. Assume that marginal cost is LOWER than marginal benefit, should more trucks be bought? Illustrate.

consumption=50+0.6yd
yd=y-TA+TR
TR=100
TA=ty=0.2y
I=50
G=75
NX=100
find AD equation
find consumptio
find aggregate demand
find TA
find slope of AD
draw AD curve by assuming different levels of y

how would you think of calculating the opportunity cost of a 4 year undergraduate degree? what are the elements of this cost that individuals tend to overlook? ( you may assume that it cost the same to live at home as it does to attend college in nearby city

Weather forecasters know they are making future predictions based only on past and present observations. What if a colleague told you that an investment in that new startup was a sure thing?

C = 250-0.75Y
I = 350
G = 800
X = 500
M = 200+0.4Y
T = 0.15Y
Use the above information to answer the following question
If C = 250-0.75Y, interpret the meaning of the value 250
State the value of MPT, MPC and MPS on disposable income and MPM
Find MPC and MPS on national income
Find the level of income in the economy
Calculate the net exports and interpret
If investment rise by 15%, what will be the change in national income

Given the national income identity Y=C+I+G+(X-M) and C=300+0.8Yd 1=650 G=750 X=550 M=350+0.15Y T=0.25Y
CALCULATE
(a) 1.injections=exports, investments
2.Withdrawals=imports and savings
(b) The marginal propensity to save on disposable income
(c) The marginal propensity to import is 0.15
(ci)The marginal propensity to tax is 0.25
(d)The marginal propensity to consume on national income
(e) The equilibrium national income level
(f) The change in equilibrium level if investment increases by 10%
(g)Change in government expenditure if full employment income level is 3600

A. Show what will happen if the government uses some fiscal policy to respond to the high unemployment rate but, due to the lags, does so only after the economy has returned to long-run equilibrium on its own. Be sure to show both the short-run and long-run effects of the fiscal policy. (3 points)