Macroeconomics Answers

Why would the supply of the pound increase if people at home are swapping their currency for other people's currency?

If the supply of corn by the Namibia is Q_n=a+bp and the supply by the rest of the world is Q_r=c+ep, what is the world supply? What is the world inverse supply?

A statistical agency measures the price index using a basket of consumer goods. This table shows the price in dollars for this basket of goods for four years.

Year Price of the
Goods Basket
1990 $500
1991 $625
1992 $690
1993 $725
4.3. In 1993:
A. The inflation rate and the price index both fell
B. The inflation rate fell but the price index increased
C. The inflation rate increased and the price index fell
D. The inflation rate and the price index both increased

Two large international holiday companies have been planning to build hotel and leisure facilities
for tourist on one of the island’s beaches. Which is also a popular day-trip destination for local
families. The government tourism minister is keen to encourage these new developments in order
to ‘make best use of our resources’. He also believes that if the hotel companies take their money
elsewhere, this could lead to a loss of tourist coming to country A.
a) State 2 possible opportunity cost to the island of decision in favor of the hotel developments

b) Using the concepts of scarce resources and the opportunity cost, discuss whether increased
tourism may be the best use of the island resources in the long term.

Suppose the marginal propensity to consume (MPS) equals 0.20, an increase in autonomous investment of $100 will lead to an increase in real Gross Domestic Product (GDP) by:

How has the PPI behaved since the year 2000?

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 bank creates money with the help of the given information. Show first five steps.
b) calculate the total money creation in the economy with the help of formula.

Commercial banks in United Economy have total deposits of AED 300 billion. Their reserves are AED 15 billion, two thirds of which are with Central Bank as deposits. There are AED 30 billion notes outside the banks. There are no coins!
Calculate-
a) The monetary base.
b) The banks reserve ratio.
c) Currency drain as a % of deposits

Assume that workers, employers and investors all believed that inflation in the coming year would equal the annualized rate of inflation experienced in the past 6 months. Also assume that workers had been receiving nominal wage gains of 5% during a several year period where the annual inflation rate was 2%. Now assume that a decline in the unemployment rate below NAIRU creates conditions where workers push for an annual real wage increase of 4%. Also assume that labor productivity growth declines to 1% per year as unemployment is squeezed below normal frictional & structural levels.
a)what rate of nominal wage growth will workers seek at the new low unemployment rate?

b) how fast will firms have to raise prices given your answer in (a) in order to protect profit margins?

c) if the rate of inflation in (b) occurs and the Fed allows AD to grow fast enough to maintain the unemployment rate below NAIRU for another year, what rate of nominal wage growth will workers seek in the following year?

d) if the rate of inflation in (b) had persisted for 6 months or more, how large an increase in the federal funds rate would be needed to increase the level of real interest rates in the economy?

central Banks occasionally employ expansionary monetary policy to realize certain economic objectives. Write detailed notes on the position of the Bank of Namibia with regard to the independence of its monetary policy.