Macroeconomics Answers

One has the following information regarding a synthetic account: Depreciation: 2.6 times larger than the subsidies Indirect Tax on goods and imports: 15.5 billion Euro Gross domestic product (market prices): 12.1 times larger than the indirect tax on goods and imports Subsidies: 5.3% from the Gross domestic product (market prices) Using a synthetic account please compute the value of the Net domestic product!

with steps of solutions

a.The value of Net Domestic Product is 133.7 billion Euro

b.The value of Net Domestic Product is 169.5 billion Euro

c.The value of Net Domestic Product is 143.0 billion Euro

d.The value of Net Domestic Product is 164.2 billion Euro

E. The value of Net Domestic Product is 156.1 billion Euro

You have an economy where only three goods are produced. The data available for 4 years is displayed as follows: Price for Product A (Year 1 / Year 2 / Year 3 / Year 4) - 100 / 105 / 107 / 110, Price for Product B (Year 1 / Year 2 / Year 3 / Year 4) - 35 / 37 / 34 / 30, Price for Product C (Year 1 / Year 2 / Year 3 / Year 4) – 62 / 60 / 63 / 64, Quantity for Product A (Year 1 / Year 2 / Year 3 / Year 4) – 300 / 307 / 318 / 319, Quantity for Product A (Year 1 / Year 2 / Year 3 / Year 4) – 500 / 515 / 525 / 535, Quantity for Product A (Year 1 / Year 2 / Year 3 / Year 4) – 290 / 270 / 278 / 295. Analyze inflation for the entire economy (include all three products in the overall production) using a Paasche index and use year 2 as basis year and year 3 as current year! with steps of solutions

a.the Paasche index is 1.0294

b.the Paasche index is 1.0160

c.the Paasche index is 0.9863

d.the Paasche index is 0.9985

e. the Paasche index is 1.02735

One has the following information about the sector of companies: Direct tax: 10% of the Profits from production and patrimony (income), Distributed Profits: 117% of the Direct tax, Current transfers toward other sectors: 6% from the Disposable Income, Disposable income: 56.9 billion Euro, Profits from production and patrimony (income): 74.4 billion Euro. Use an account of the sector of companies and compute the value of the current transfers received from other sectors!

a.The value of the current transfers received from other sectors is 25.1 billion Euro

b.The value of the current transfers received from other sectors is 14.6 billion Euro

c.The value of the current transfers received from other sectors is 5.6 billion Euro

d.The value of the current transfers received from other sectors is 1.0 billion Euro

e.The value of the current transfers received from other sectors is 2.1 billion Euro

For country X you have the following data for four years. Year 1: Private Consumption – 95000 billion. Euro / Public Consumption – 35500 billion. Euro / Gross capital formation – 36000 billion Euro / Net Export – (-3500) billion Euro, Year 2: Private Consumption – 99000 billion Euro / Public Consumption – 39000 billion Euro / Gross capital formation – 39500 billion Euro / Net Export – (-4800) billion Euro / GDP Deflator - 103% (compared to year 1), Year 3: Private Consumption – 98000 billion Euro / Public Consumption – 38500 billion Euro / Gross capital formation – 37500 billion Euro / Net Export – (-4200) billion Euro / GDP Deflator - 104 % (compared to year 1), Year 4: Private Consumption – 99800 billion Euro / Public Consumption – 40050 billion Euro / Gross capital formation – 39700 billion Euro / Net Export – (-4700) billion Euro / GDP Deflator - 106 % (compared to year 1). Analyze the real evolution of the GDP over the current-basis period using indices (Use year 1 as basis and Year 2 as current)!

One has the following information about the sector of companies: Direct tax: 1.6 times larger than the Distributed Profits, Distributed Profits: 15% of the Profits from production and patrimony (income), Current transfers toward other sectors: 3% from the Disposable Income, Disposable income: 61.3 billion Euro, Profits from production and patrimony (income): 79.5 billion Euro. Use an account of the sector of companies and compute the value of the current transfers received from other sectors!

You have an economy where only three goods are produced. The data available for 4 years is displayed as follows: Price for Product A (Year 1 / Year 2 / Year 3 / Year 4) - 100 / 105 / 107 / 110, Price for Product B (Year 1 / Year 2 / Year 3 / Year 4) - 35 / 37 / 34 / 30, Price for Product C (Year 1 / Year 2 / Year 3 / Year 4) – 62 / 60 / 63 / 64, Quantity for Product A (Year 1 / Year 2 / Year 3 / Year 4) – 300 / 307 / 318 / 319, Quantity for Product A (Year 1 / Year 2 / Year 3 / Year 4) – 500 / 515 / 525 / 535, Quantity for Product A (Year 1 / Year 2 / Year 3 / Year 4) – 290 / 270 / 278 / 295. Analyze inflation for the entire economy (include all three products in the overall production) using a Paasche index and use year 2 as basis year and year 3 as current year!

Explain the difference between heterodox and orthodox stabilization programs.

(a) Write out the equation that represents the Taylor rule. Then, discuss how the Taylor rule is used to explain the implementation of monetary policy.

(b) Central bank is very importance to determine the economic performance of the country.

(1) What can be done to increase central bank credibility?

(2) Why is central bank credibility important?

(c) Discuss the time inconsistency problem and explain how it relates to monetary policy.

a. Suppose the central bank increases the rate of growth of the money supply. What effect will this increase in money growth have on seignorage in:

(1) The short run; and

(2) The medium run? Explain.

b. What is meant by debt monetization? Explain your answer with appropriate graph of the IS-LM model.

Consider the following data

Y

X

5

64

2

87

12

50

9

71

15

44

6

56

25

42

16

60

Plot a graph of Y against X

Find the correlation between Y and X

Test at 5% level of significance whether the correlation is significant or not