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If the consumption function of a given individual is given C= 44+0.86Yd and the individual’s disposable income for a specific period was birr 3600,
Assuming the economy was in a recession which was taken care of by the monetary sector through monetary expansion. Consider the short and long run effects of the policy on output, employment, interest rate and price level.
Given the following information answer each of the following questions: - Ca=20 c=MPC=3⁄4 Ia =I=20
When inflation gets very high, people do not like to hold money because it is losing value
quickly. Therefore, they spend it faster.
When the money supply is doubled, if people spend money more quickly, what happens to
prices? Do prices more than double, less than double, or exactly double? Explain using the
Quantity Theory of Money
Currently, we Ethiopian faced a problem of war in some part of Ethiopia such as State of Amhara, State of Afar and Tigray. This problem caused low production, output, high unemployment rate, low aggregate demand. The macroeconomics has considered the state of macroeconomics, the philosophies that have been most important in the 21th century. Given the situation, what would a state of macro economics recommend be done? And as off you what would be done?
Consider the following equations for a small open economy for both the goods and money markets.
C = 3000 + 0.8Yd; T = 1000 + 0.3Y; G = 6000; TR = 500; I = 4000 + 0.24Y – 100r; M = 3000 + 0.2Y; X = 2000; LP = 1000 + 0.15Y; LT = 2000 + 0.25Y – 15r; Ls = 1000 – 35r; MS = 40,000; P= 4
a. Derive both the IS and LM equations for the economy and compute the Equilibrium level of Income and Interest Rate.
b. At this equilibrium level of income and interest, compute the levels of disposal income, total transactions demand for money, investment demand and the value of net exports.
c. Suppose the government raises govt. expenditure by 20% in order to increase aggregate demand. Show how this policy results in the crowding out effect.
Consider the following equations for a small open economy for both the goods and money markets.
C = 3000 + 0.8Yd; T = 1000 + 0.3Y; G = 6000; TR = 500; I = 4000 + 0.24Y – 100r; M = 3000 + 0.2Y; X = 2000; LP = 1000 + 0.15Y; LT = 2000 + 0.25Y – 15r; Ls = 1000 – 35r; MS = 40,000; P= 4
a. Derive both the IS and LM equations for the economy and compute the Equilibrium level of Income and Interest Rate.
b. At this equilibrium level of income and interest, compute the levels of disposal income, total transactions demand for money, investment demand and the value of net exports.
c. Suppose the government raises govt. expenditure by 20% in order to increase aggregate demand. Show how this policy results in the crowding out effect.
Consider the following equations for a small open economy for both the goods and money markets.
C = 3000 + 0.8Yd; T = 1000 + 0.3Y; G = 6000; TR = 500; I = 4000 + 0.24Y – 100r; M = 3000 + 0.2Y; X = 2000; LP = 1000 + 0.15Y; LT = 2000 + 0.25Y – 15r; Ls = 1000 – 35r; MS = 40,000; P= 4
a. Derive both the IS and LM equations for the economy and compute the Equilibrium level of Income and Interest Rate.
b. At this equilibrium level of income and interest, compute the levels of disposal income, total transactions demand for money, investment demand and the value of net exports.
c. Suppose the government raises govt. expenditure by 20% in order to increase aggregate demand. Show how this policy results in the crowding out effect.
. Explain the relationship between inflation and unemployment both in the short run and long run.
Suppose a Mrs. Chakay marries her butler, Ato Tachakay. After they are married, her husband continues to wait on her as before, and she continues to support him as before (but as a husband rather than as an employee). How does the marriage affect GDP? How should it affect GDP?Justify your debate.
