Macroeconomics Answers

Assume that an economy is initially operating at the natural rate of output (full employment output). Use the AD-AS model to illustrate graphically the effects on price and output of an increase in government spending and a decrease in the cash rate. Explain your assumptions with respect to the range of aggregate supply of your analysis

a) Give the definition of GDP and explain what items are not included in its calculation? b) How is GDP calculated using the expenditure approach? c) How is GDP calculated using the income approach? d) Explain the problem of "double-counting" and how it can be avoided in calculating GDP

On what market imperfection does the four theories of aggregate supply rely?

 Suppose individual demand schedules for A, B and C are given as follows:Find:(a) market demand schedule(b) market demand curve;(c) elasticity when price falls form $15 to $10; and(d) elasticity when price rises from $10 to $5.

Given closed economy model: ( )

i. Drive the balanced budget multiples and show it does not have multiples effect.

(Hint dG = dT)

ii. Find the government multiplier for a variable tax

iii. Suppose the lump sum tax rate has increased. Derive the tax rate multiplier and show

increase in tax rate is regressive.

How can the economic perspective help us understand the behavior of fast-food consumers? Explain several insights it provides about customer behavior.

The data processing cycle – data input, processing, storage, and output – was introduced in this chapter. In the future, do you see any of these activities being deleted or additional activities being added? If so, what changes do you foresee? Do you foresee any changes to the way these four activities are implemented or handled? If so, how? If not, why no changes? Write 100 words for the answer.

ERP systems have many disadvantages, such as being complex, very expensive, and difficult to implement. However, they have powerful advantages, such as better customer service, more integrated operations, and access to all or most of an organization’s data. If you were asked to determine if your company should implement an ERP system, how would you determine whether the benefits of a new system outweigh its disadvantages? Write 100 words for the answer.

1. You are trying to decide whether to take a vacation. Most of the costs of the vacation (airfare, hotel, and forgone wages) are measured in dollars, but the benefits of the vacation are psychological. How can you compare the benefits to the costs?

Indirect Business Taxes 919.0

Corporate profits 1208.9

Corporate profits taxes 469.4

Retained earnings 330.8

Proprietors' income 1038.4

Rental Income 62.1

Net Interest 1171.1

Exports 1685.7

Imports 2380.4

Income Receipts from rest of world 855.6

Income Payments to rest of world 754.9

Net National Product 12380.8

Government expenditures for Goods and Services 2716.5

Personal current Transfer receipts 1742.3

Social Security Taxes (employee & employer) 981.5

Personal Consumption expenditures 9785.7

Gross Private Domestic Investment 2162.9

Disposable personal income 10257.5

f. Find Wages and Salaries.

g. Find the percentage 'Wages and Salaries' is of National income.

h. Find Personal Income.

i. Find Personal Income Taxes.

j. Find Personal Saving.

k. Find the percentage Personal Saving of Disposable Personal Income

Assume an economy where money demand varies directly with real income and inversely with nominal interest rate. What will happen to the price level in the economy today, if the central bank announces that it will decrease the money growth rate in the future while keeping the money supply unchanged?