Macroeconomics Answers

Many economists have argued that a form of ‘congestion tax’ ought to be imposed on the motorists who use their cars on busy roads, to take account of the external costs they impose on other road users and pedestrians. List and compare the advantages and disadvantages of the following three measures to reduce congestion in Australia:

Autonomous spending 100mil, Investment spending 200mil, government spending 150mil, and autonomous net exports 150mil. marginal propensity to consume to be 3/5 and proportional tax rate 1/6. the full employment level of income to be 1500mil. calculate the change in government spending required attaining full employment

Give two concrete example of sunspot theory. Why does poor countries takes too long to complete one business cycle?

Suppose you own a bicycle but haven't found the time to ride it much lately. These days, it is only worth $43 to you. One of your close friends, who recently got a job at the college bookstore two miles down the road, wants to take it off your hands. He offers you $70 for the bicycle, and you gladly accept. Your friend is also happy because he thinks the bicycle is worth $97. How much total value was created from this trade?

An economy produces final goods and services

with a market value of $5,000 billion in a given

year, but only $4,500 billion worth of goods and

services is sold to domestic or foreign buyers. Is

this nation’ s GDP $5,000 billion or $4,500 billion?

Explain your answer.

In the above figure, illustrate the effect on the AS curve from an increase in the money price of a key input/resource such as oil.

country’s current account / positive balance of payments

Use a diagram of the open economy model to illustrate and explain the effect of the following event on the market for loanable funds, the level of net foreign investment, the market for foreign-currency exchange, the market of good and services and the job market. In your answer make sure you discuss the impact on the following variables:
• Interest rates, public savings, private savings, national savings, investment, net foreign investment, supply of currency, the exchange rate and the level of net exports.
Event: There is a decline in consumer confidence in the economy
Note: Ignore the detail and politics of this event. Focus only on analysing the market adjustment in each case. Fully explain all the transmission mechanism.

Examine how the purchasing-power parity theory determines exchange rates and their implications on trade, job creation and interest rate on the country.

Explain how net foreign investment measures the international flow of capital and how it can influence the market of goods and services, labour market and financial market.
Hint: Provide possible examples or case studies.