Macroeconomics Answers

consider a hypothetical economy where autonomous C ,autonomous I,autonomous G,autonomous TR ,mpc and t iss given
calculate the level of autonomuous expenditure,equilibrium income,consumption ,total taxes and multiplier

Which is the correct multiple choice answer?

The GDP deflator is not suitable as a measure of household inflation because,
a) it does not include intermediate goods
b) it does not include primary products
c) it does not include changes to the prices of imported final goods
d) it focuses on the costs of production, not costs of consumer goods
e) GDP is used to measure household welfare

If the US government has heavy spending would this massive spending cause 1) the real wage to rise 2) the nominal wage to rise 3) both 4) neither

Suppose equilibrium GDP is less than full-employment output and the economy is in a recession. What are the appropriate fiscal policies that would take the economy to full employment level?
Increase taxes
Decrease government spending
Lower transfer payments
Decrease taxes

Year
Nominal
GDP (bill.)
Price
Index (GDP deflator)
Real
GDP (bill.)

Year 1
$4,486.0
108


Year 2
$4,710.3
112







(ii) Between Year 1 and Year 2, the price level has___ increased/decreased by ____%

Suppose a country institutes an investment tax credit, and this leads to an increase in investment
spending of $100 billion. Suppose the multiplier is 1.5 and the economy’s real GDP is $5,000 billion.
A. In which direction will the aggregate demand curve shift and by how much?
B. Explain using a graph why the change in real GDP is likely to be smaller than the shift in the
aggregate demand curve

What market failure a mango tree in an open lot represents?

Answer the questions, based on the following information.


Year
Nominal
GDP (bill.)
Price
Index (GDP deflator)
Real
GDP (bill.)

Year 1
$4,486.0
108


Year 2
$4,710.3
112







(i) Between Year 1 and Year 2, nominal GDP has (increased/decreased) by %.

consumer consumes only two goods for the consumer to be in equilibrium. why must rate of substitution (MRS) between the two goods must be equal to the ratio on prices of these two goods. IS it enough to ensure the equilibrium?

In an expansion, holding everything else constant, a previously existing budget deficit will automatically increase , partly because transfers decrease . is this correct?