Macroeconomics Answers

A) outline 3 factors affecting aggregate demand

B) how can government X use one of these factors to increase aggregate demand of the country

There are many alternatives entertainment methods which has resulted in a huge decrease in theme park visitors. The government is considering imposing a price floor or providing a subsidy to theme park visitors. Appraise the welfare effects of the two policies with suitable theme park market diagrams.Your diagrams should take into consideration the price elasticity of supply and demand of theme park in general.

1 On Feb 1, 2022, the yield (nominal interest rate) on the Canadian government issued 10-year bond was 1.77% (that part is true). Given that yield, it is impossible for the real interest rate on this bond to be negative.

2 Suppose the table below shows the prices and quantities of the average household consumption basket (bundle) in a country over two years. Since the price of good A decreased by 5% and the price of good B increased by 5%, then (using year 1 is the base year), the inflation rate in the CPI equals 0%.

Good A

Good B

Price A Year 1 $10.00

Year 2 $9.50

Quantity A

200 240

Price B

$4.00 $4.20

Quantity B

2000 1000

3 Suppose a giant snowstorm leaves you snowed in. If your snowblower owning neighbour comes over to help you dig out, this is worse for economic wellbeing than if you had hired a snow removal company to do the same thing.

State the assumptions of the Heckscher–Ohlin the-

ory. What is the meaning and importance of each

of these assumptions?

In what ways does the Heckscher–Ohlin theory

represent an extension of the trade model pre-

sented in the previous chapters? What did classical

economists say on these matters?

Suppose an economy is described by following aggregate expenditure (AE) model: C = 10 + 0.8YD I = 30

where C is consumption (0.8 is the marginal propensity to consume) YD is disposable income, and I is investment spending.

1. (a) Derive an expression for AE as a function of Y. Calculate the equilibrium level of Y and illustrate in a diagram with AE on the vertical and Y on the horizontal axis. 

Peter consumes only chocolate ice cream and vanilla ice cream. He is spending all of his income. His marginal utility of chocolate is 200 and his marginal utility of vanilla is 200, and the price of chocolate is $1.00 per scoop and the price of vanilla is $2.00 per scoop. To maximize his utility, Peter should

If the South African Reserve Bank (SARB) increases the repo rate from 4% to 6% by how many basis points did the repo rate increases?

How do firms maximize profit in a perfectly competitive market?

Discuss how a break-even point is determined or calculated.