Macroeconomics Answers

one day, ben the barber collects ghc 400 for haircuts. over this day, his equipment depreciates in value of ghc50. of the remaining ghc350, ben sends ghc30 to the government in sales taxes, takes home ghc220 in wages, and retains ghc100 in his business to add new quipment in the future. from the ghc220 that ben takes home, he pays ghc70 in income taxes. base on this information, compute bens contribution to the following measures of income: national income

Using the multiplier model, evaluate the effects of the following scenarios on Real GDP. In all of these scenarios, the MPC is 0.8.
A) The government increases its spending on infrastructure by $100 million. B) The government increases taxes by $100 million.
C) The government reduces its spending on goods and services by $10 million. D) The government reduces social security benefits by $10 million.

Demand in a market is given by Q=3p^-7.6 where p is the market price. What is the elasticity of demand? Include the negative sign if necessary.

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4.1 A classmate of yours tells you that, the combination of inflation and a progressive income tax system tend to redistribute income in the economy.
Explain why this is true.

Increase in human capital (12 marks)

In the one period model we assume that the representative agent can only spend its time (h) in two ways: 1)leisure, 2)hours worked. Now assume that we introduce time spent on building human capital.

i) If the representative agent choses to invest in human capital, supply labour and enjoy leisure how will this impact the budget constraint of the representative consumer? Draw the initial and new budget constraint. (3 marks)

ii) What is the impact of positive human capital on consumption, leisure, employment, output and the real wage? (6 marks)

iii) Application: How does investing in human capital benefit the economy? If income inequality increases over time how will this impact the investment people make in human capital? (3 marks)

Some observers maintain that the economic goals of the American people are impractical, achievable, and inconsistent. They argue, for example, that economic efficiency and economic justice are frequently in conflict with each other. Explain, with examples to back up your point of view, why you agree or disagree with this statement.

In a closed economy with no govt Consumption function is C=100+0.8Y where Y is income
What happens to income Y if investors become more optimistic snd increase investment by 20?
Looking for an explanation with the answer as to Y moves in the direction it does.

Start from the Cobb-Douglas production function where the parameters á and â are constant, 0 < á < 1 and á + â = 1.2. Derive the expression for the growth rate of output per worker in balanced growth equilibrium. Show all your steps. In this case, will the growth rate of output per worker be equal to, less than, or greater than the growth rate of efficiency in balanced growth equilibrium?

Suppose that Mexico in 2000 was on its balanced-growth path. Output per worker in Mexico in the year 2000 was about $10,000 per year. Labor-force growth was 2.5 percent per year. The depreciation rate was 3 percent per year. The rate of growth of the efficiency of labor was 2.5 percent per year. The saving rate was 16 percent of GDP. The diminishing-returns-to-investment parameter á is 0.5
A. What is Mexico’s equilibrium capital-output ratio? What was the value of efficiency in 2000?
B. What is your forecast of output per worker in Mexico for 2040?
C. Suppose instead the labor-force growth rate fell to 1 percent per year in 2000 and remained at 1 percent. What is your new forecast of output per worker in Mexico for 2040?
D. In words, not equations, explain why your forecasted level of the standard of living changed as a result of the lower labor-force growth rate.