Macroeconomics Answers

Suppose the SARB increases repo rate in an attempt to decrease inflation. As a result, the

In the 2015 budget speech, the Minister of Finance announced an increase in taxes amounting to R17 billion in the 2015/16 financial year. In the context of the circular flow, this increase in taxes will be a(n) 

Where 

C=250+0.75Yd

I=350

G=800

X=500

M=200+0.4Y

T=0.15Y

Use the above information to answer the following questions 

1) if C=250+0.75Yd interpret the meaning of the value 250

2)state the values of MPT,MPC and MPS on disposable income and MPM

3)find MPC and MPS on national income 

4)find the level of national income in the economy 

5) calculate net exports and interpret 

6) if investment rises by 15% ,what will be the change in National income 

Where

C=250+0.75Yd

I=350

G=800

X=500

M=200+0.4Y

T=0.15Y

Use the above information to answer the following questions

1) if C=250+0.75Yd interpret the meaning of the value 250

2)state the values of MPT,MPC and MPS on disposable income and MPM

#2

Suppose you have a supply curve for Corn. Show the impact graphically (draw the

graph) to illustrate the impact of each of the following events on the supply curve.

(hint: should be a movement along the existing supply curve, a shift the supply

curve left, or a shift the supply curve right)

The weather is great for producing corn

b. The weather is terrible for producing corn

The price of corn increases

d.

There is an increase in the technology for producing corn

e

There is an increase in fuel costs for producing corn

The government of a poor developing country fears that a political upheaval will occur unless

the growth rate is at least 4 percent per annum. The ICOR and the saving rate are projected to be

v = 5.0 and s = 14 percent, respectively.

a. Show that 4 percent growth cannot be achieved under these circumstances.

b. With the saving rate as given, what ICOR would be required to achieve the 4 percent growth

target?

c. What happens to the question (a) and (b) if population growth and depreciations in Harrod

Model is = δ = 0. 02 ?

In India during the 1980s the incremental capital-output ratio (ICOR) averaged 2.50 and

population growth rate and depreciation respectively, n=0.02, δ=0.01.

a. Using the Harrod growth equation, what saving rate would have been required for India to

achieve an aggregate growth rate of 8 percent per annum?

b. With the same ICOR, what growth target could be achieved with a saving rate of 27 percent?

c. If there is a large increase in the saving rate, and therefore a large increase in the amount of

new capital formation, is the ICOR likely to rise, fall, or remain the same? Explain.

Consider a central bank that has an inflation target, π*. The Phillips curve is given by,

πt- πt-1 = -α(ut-un).

a) Is the central bank likely to be able to hit its inflation target every period? Explain

b) Suppose the natural rate of unemployment, Un, changes frequently. How will these changes

affect the central bank’s ability to hit its inflation target? Explain.

What are the macro prudential tools? Explain by giving three appropriate examples.

The Mundell - Fleming assuming imperfect capital mobility, analyze the effects of an expansionary fiscal policy. Consider the effect of the policy on the income when the exchange rate is fixed and when the exchange rate is flexible. Explain by using the appropriate graph. Give your conclusion regarding the effectiveness of policy.