Macroeconomics Answers

Sadiki
Peter and Jane receive the same annual income, but Peter , who gets paid monthly, will have a much higher demand for active balances than Jane, who gets paid weekly.

a. Is this statement true ?
b. Justify your answer.

After graduating from college in 2010, Art Major\'s starting salary is $50757.00. Suppose Art Major has a cost of living adjustment (COLA) clause, i.e. an escalator clause in his labor contract so that he will be able to maintain this same level of purchasing power in real terms in 2011 and 2012. Using the information in the table below, how much will Art Major be earning in 2011 and 2012 if his salary keeps up with inflation? Round your answers to the nearest dollar.

If the unemployment is above zero, the economy is not equal to its potential output. True or false? Explain

In the international market for strawberries, Ireland is small and can be assumed to be unable to affect world prices. It imports strawberries at the price of 15 euros per box. The domestic supply and domestic demand curves for boxes of strawberries are given by QS = 60 + 20P and QD = 1225 – 15P respectively.

i. Assume Ireland is completely open to trade. What is the equilibrium price and quantity consumed? How much is produced domestically and how much is imported? Illustrate you answer on a diagram.
ii. Now consider the effect of an import quota of 400 boxes. What happens to the price of strawberries and the quantity consumed? How much is produced domestically and how much is imported? Illustrate you answer on a diagram.
iii. Who wins and who loses from the imposition of the quota? Discuss the effects on consumers, domestic producers and importers in terms of welfare changes. Illustrate you answer on a diagram.

A. Suppose that the demand and supply curves for coffee in the United States are given by P = 200 - QD and P = 50 + 0.5QS respectively.

i. What are the equilibrium price and quantities if there is no international trade?
ii. What are the equilibrium quantities (supply, demand) for the US if the nation can trade freely with the rest of the world at a price of 50? In other words, what is the quantity demanded and supplied in the US at this new price? What trade occurs as a result of this change? Show this diagrammatically.
iii. What is the effect of the shift from autarky to free trade on US consumer surplus (CS), on US producer surplus (PS) and on overall US welfare (CS + PS)? Discuss these changes and illustrate them diagrammatically.

Assume exports increase by $500 million and imports decrease by $300 million and that the MPC is .75. What's the effect on real GDP?

Answer Choices:
a. $3.2 billion increase
b. $800 million increase
c. $200 million decrease
d. $4 billion increase

would like to know the solow model during Spain's 2007-08 crisis?

Suppose the real rate of interest is 3%, and the money supply is growing at 5%. If the growth rate of the money supply
rises to 10%, then, according to the Fisher effect,
what is the change in the
real rate of interest?
nominal rate of interest?

The canadian government cuts spending by $1 billion using both words $ diagrams, fully explain how this will affect the Canadian economy.
a.) If Canada is a closed economy
b.) If Canada is an open economy