Macroeconomics Answers

The people on thohoyandou island buy only juice and cloth the cpi basket contains the quantities bought in 2010 the average household spent $60 on juice and $30 on cloth in 2009 when the price of juice was $2 a bottle and the price of cloth was $5 a meter in the current year 2010 juice is $4 a bottle and cloth is $6 a meter calculate cpi per basket [3]

calculate the equilibrium level of income if C=R100 million+0.8Y and I=R125 million.

onsider the following numerical example of the simple Keynesian model with no government spending, taxes or a foreign sector (all figures in R millions):
C = 100 + 0,9Y
I = 50
Answer the following questions.

A. Use a graph to illustrate the equilibrium level of output. [5]

. the inflation rate[3].

6. UK’s real GDP was 1 360 trillion pounds [£] in 2009 and 1 434 trillion pounds in 2010. UK’s population was 191.5 million people in 2009 and 193.3 million in 2010.
Calculate.
a. the economic growth rate.[3]
b. The growth rate of real GDP per person [5]
c. The approximate number of years it takes for real GDP per person in the UK to double if the 2010 economic growth rate and population growth rate are maintained.[4]

Government Expenditure: 8
Consumption Expenditure: 35
Disposable Income: 50
Net Taxes: 12
Imports: 7
Exports: 9

Data is in millions of US dollars.

a. Based on the data provided above, what is the value of National Income (GDP or Y)?
b. Based on the data provided above, what is the value of Private Savings?
c. Based on the data provided above, what is the value of Government Savings?
d. Based on the data provided above, what is the value of National Savings?
e. Based on the data provided above, what is the value of Net Exports?
f. Based on the data provided above, is this country a net lender or net borrower?

1: Suppose that there is an increase in taxes of $16 billion, and that Real GDP decreases by $20 billion as a result. What is the value of the tax multiplier?

2: Suppose that the euro was trading for $1.2 U.S. dollar in June 2015, and then the price of euro increased to $1.5 in June 2016. How would this change affect the U.S. aggregate demand schedule?

3: Suppose you and your parents are watching on TV an interview with a Wisconsin cranberry farmer who exports his produce to Europe. The farmer is cheerfully talking about how good the business has been due to the weak US dollar against the euro. Your parents, who were planning to take a trip to Italy, are very unhappy about the weak dollar and canceled their trip because of it. Why do the farmer and your parents have these two different reactions to the weak dollar?

In the Mundell-Fleming model with a floating exchange rate, what happens to aggregate income, the exchange rate, and the trade balance when the world interest rate rises?

For an economy the following functions have been given:
C = 100 + 0.8Y
I = 120 – 5r
Ms = 120
Md = 0.2Y – 5r
Calculate the following:
1 IS equation
2. LM equation
3. Equilibrium level of income
4. Equilibrium level of interest rate.

Explain briefly why a monetary contraction for a small open economy under fixed exchange rates will have no effect on real income.

Explain how inflation rate ,that is usually reported every month in the media ,is obtained .use hypothetical figures for calculations .