Macroeconomics Answers

Briefly describe what would happen to the current accounts if a small open economy experiences an increase in the expected future marginal product of capital?

If an economy's output exceeds its absorption, what implication does that have on net exports?

Explain the implications and short comings of the kinked demand curve in an oligopolistic market.

1. In 2012 a study published from the International Monetary Fund (IMF) reported that the fiscal
multiplier for the periphery of Eurozone was roughly equal to 0.5. One year later, IMF
recognised its mistake reporting that the fiscal multiplier was approximately equal to 1.7.
Explaining what the fiscal multiplier is, discuss the above statement.

2.3 Suppose that you are the managing director of a firm that supplies three goods: laptops, USB drives and external hard drives. The price elasticity of the demand for laptops is 2.0; for USB drives it is 1, 00; and for external hard drives it is 0, 53. The firm is experiencing serious cash flow problems and you have to increase total revenue as soon as possible. You are in a position to set the prices for these goods. What would be your pricing strategy for each product? Motivate your decisions

Suppose that for a two sector model, the marginal propensity to consume (mpc) is 90%. What is the induced consumption expenditure equal to ?

Using properly labelled diagrams illustrate what will happen to the equilibrium price and quantity of muesli (ceteris paribus), in the following scenarios;
1. Research has shown that muesli is good for the heart;
2. The ongoing drought has affected grain (one of the ingredients for muesli) production.

Currency held by the public is part of what?

Blue Kashmir Sapphires is generally believed to be a relatively rare gemstone. Use demand and supply curves to illustrate and explain why such a rare item is sold at such a high price.

Suppose that you are the managing director of a firm that supplies three goods: laptops,USB drives and external hard drives.The price elasticity of the demand for laptops is 2,0, For USB drives it is 1,00 and for external hard drives it is 0,53. the firm is experiencing serious cash flow problems and you have to increase total revenue as soon as possible.You are in a position to set the prices for these goods.What would be your pricing strategy for each product? Motivate your decisions.