Macroeconomics Answers

What Marx called “underconsumption” is very similar to Keynes’ concept of
a. inadequate aggregate demand.
b. inadequate aggregate supply.
c. lack of productivity.
d. demand-pull inflation.
e. both b) and d) are correct.

Consider the aggregate demand & aggregate supply model with three ranges. In which range will an increase in aggregate demand cause an output and employment increase without causing inflation?
a. Keynesian
b. intermediate
c. classical
d. None of these since an increase in aggregate demand must by definition cause an increase in prices.

Derive the demand for labor if the production function is given by f(L)=L^0.5
.
Illustrate the labor market graphically

if the change would lead to an increase or decrease in the equilibrium level of output.
. Planned investment increases

suppose Mr.Y deposits AED 100.000 into a one-year certificate of deposit at 5% interest.the central bank sets the reserve ratio for the banks at 10%.
a.illustrate how the banks create money with the hep of given information.(show first 5 steps)
b.calculate the total money creation in the economy with the help of formula.

How does the Michigan Consumer Sentiment Index affect the bond market and foreign exchange?

an open macroeconomic model for a hypothetical economy is represented as follows

Y=Co+Io+Go+Xo-Mo, M=mo+m1yd, C=co+c1yd, T=tY and Yd=Y-T

a) Show that equal change in tax ans government expenditure are expansionary to the economy

b) Derive the equilibrium level of savings in the economy

You are given the following information about the commodity and money markets of a closed economy without government intervention.
The Commodity Market
Consumption Function: C=50+2/5Y
Investment Function: I=790-21r

The Money Market
Precautionary and Transactions demand for money : MDT=1/6Y
Speculative demand for money: MDS=1200-18r

Required
Determine the equilibrium levels of income and interest rate for this economy
using a well labelled diagram, illustrate the equilibrium condition in part (i) above

The economy of Kenya has a budget deficit of KSH 500B and debt of 2.9 trillion. Using an appropriate model, explain the macroeconomic implications of such a debt and a deficit.

Using appropriate model, illustrate the effect of an expansionary fiscal policy in an open economy operating in free exchange rate regime .Assume perfect capital mobility. What is the effect if the government uses monetary policy alternatively?
a. The Balance of payment deficit is not a problem in a free exchange rate regime? Explain.
b. In a fixed exchange rate regime, monetary policy is ineffective? Is this true? Explain using the mundell- fleming model