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Macroeconomics
In a market economy, decisions about what to produce are made primarily by
A) the government
B) individuals and firms
C) firms in consultation with the government
D) a central planning committee
A) the government
B) individuals and firms
C) firms in consultation with the government
D) a central planning committee
Macroeconomics
2 questions:
1. If interest paid on public debt is not included in government expenditures (i.e. not included in GDP expenditure approach) but this same very interest is income for bondholders (whether be it corporate profits for financial companies, interest received or some other type of income), so that it's included in GDP income approach. So, how in this case the two GDPs (i.e. expenditure and income approach) correspond with each other?
2. Is interest paid on consumer loans (i.e. by households) included in GDP and what might the corresponding entry in GDP expenditure approach?
1. If interest paid on public debt is not included in government expenditures (i.e. not included in GDP expenditure approach) but this same very interest is income for bondholders (whether be it corporate profits for financial companies, interest received or some other type of income), so that it's included in GDP income approach. So, how in this case the two GDPs (i.e. expenditure and income approach) correspond with each other?
2. Is interest paid on consumer loans (i.e. by households) included in GDP and what might the corresponding entry in GDP expenditure approach?
Macroeconomics
Suppose that an endogenous variable yt is related to two exogenous shocks:
yt=α*ε_t+β*η_t
where alpha and beta are positive parameters and ε_t~iidN(μ_ε,σ^2_ε)/ η_t~iidN(μ_η,σ^2_η)
cov(ε_t, η_t)=0. eqsilon and eta are unobservable.
(1) are all the parameters(alpha, beta, mus, sigmas) identified?
(2) suppose that alpha=beta=1 and that we can observe another variable x_t=η_t.
can we identify the remaining parameters?
(3) suppose that y is not observed. with the information in (2), what is E(y|x)?
yt=α*ε_t+β*η_t
where alpha and beta are positive parameters and ε_t~iidN(μ_ε,σ^2_ε)/ η_t~iidN(μ_η,σ^2_η)
cov(ε_t, η_t)=0. eqsilon and eta are unobservable.
(1) are all the parameters(alpha, beta, mus, sigmas) identified?
(2) suppose that alpha=beta=1 and that we can observe another variable x_t=η_t.
can we identify the remaining parameters?
(3) suppose that y is not observed. with the information in (2), what is E(y|x)?
Macroeconomics
Suppose the following equations characterize the supply and demand in the labor
market model:
Labor Supply: LS = 2W+30
Labour Demand: LD = 60 - w(1+T)
W = WAGE/ T = PAYROLL TAX.
Suppose T= 0.2, solve for the equilibrium values of wage and labour supply.
market model:
Labor Supply: LS = 2W+30
Labour Demand: LD = 60 - w(1+T)
W = WAGE/ T = PAYROLL TAX.
Suppose T= 0.2, solve for the equilibrium values of wage and labour supply.
Macroeconomics
EFFECTIVENESS OF MONETARY POLICY UNDER LIFE CYCLE HYPOTHESIS
Macroeconomics
outline the differences in arguments of the monetarist and keynesians in holding money and the effects of money supply growth
Macroeconomics
suppose the nominal rate of interest in an economy is 10% and rate of inflation is 6% per annum respectively,
a) determine the real rate of interest.
b)discuss two factors that lead to a change in the general level of interest rate.
a) determine the real rate of interest.
b)discuss two factors that lead to a change in the general level of interest rate.
Macroeconomics
suppose the nominal rate of interest in an economy is 10% and rate of inflation is 6% per annum respectively,
a) determine the real rate of interest.
b) discuss two factors that lead to a change in the general level of interest rate.
a) determine the real rate of interest.
b) discuss two factors that lead to a change in the general level of interest rate.
Macroeconomics
suppose the nominal rate of interest in an economy is 10% and rate of inflation is 6% per annum respectively,
a) Determine the real rate of interest
b) Discuss two factors that lead to a change in the general level of interest rate
a) Determine the real rate of interest
b) Discuss two factors that lead to a change in the general level of interest rate
Macroeconomics
Marginal propensity to save (MPS)=0.2 , Tax rate (t)=0.2 ,Autonomous savings=-50,Investment spending(I)=100, Government expenditure(G)=150, Exports(X)=200, Autonomous imports =30, Marginal propensity to import(m)=0.15
a)derive the consumption equation from the information given.
b)calculate the equilibrium level of income using the AD=AS approach.
c)calculate the level equilibrium level of income using the injections=withdrawals approach.
d)calculate the fiscal surplus(or deficit)at the equilibrium level of income.
e)calculate the value of net exports at the equilibrium level of income.
f)what would the level of income have to be if net exports are zero?
g)what is the value of the multiplier in an economy:
i)consisting only of households and businesses(no government or foreign sectors).
ii)consisting of households, businesses and the government(but no foreign sector)
iii)consisting of households, businesses and the government and foreign sectors?
a)derive the consumption equation from the information given.
b)calculate the equilibrium level of income using the AD=AS approach.
c)calculate the level equilibrium level of income using the injections=withdrawals approach.
d)calculate the fiscal surplus(or deficit)at the equilibrium level of income.
e)calculate the value of net exports at the equilibrium level of income.
f)what would the level of income have to be if net exports are zero?
g)what is the value of the multiplier in an economy:
i)consisting only of households and businesses(no government or foreign sectors).
ii)consisting of households, businesses and the government(but no foreign sector)
iii)consisting of households, businesses and the government and foreign sectors?
