Macroeconomics Answers

Suppose the Federal Reserve’s policy is to maintain low and stable inflation by keeping unemployment at its natural rate. However, the Fed believes that the natural rate of unemployment is 4 percent when the actual natural rate is 5 percent. If the Fed based its policy decisions on its belief, what would happen to the economy? How might the Fed come to realize that its belief about the natural rate was mistaken?

Calculate the total change in aggregate demand because of an initial $300 decrease in investment spending, given that C = 150 + 0.50YD.
$1,200 decrease
$300 decrease
$150 decrease
$600 decrease

The MPC in your economy is 0.70 with an autonomous consumption of Tk 80 billion. Your economy is a open economy with I, T, R, G and XN with an exogenous amount of 20, 50, 20, 60 and 5 billion Taka, respectively. Find out your equilibrium GDP with two, three and four sector economy. Do you think your GDP will increase for:

TK 10 billion extra transfer payment;
Tk 10 billion new government purchases ; and
Tk 5 billion increase in the net export
If all of the above are considered together ?

Strengths and weaknesses of Neoclassical Economics

Indicate how each of the following activities will affect GDP:

a. You pay $600 per month to lease an apartment  while attending school.

b. You pay $8,000 to purchase a four-year-old car.

c. You have car trouble and have to pay a repair  shop $1,500 to fix the transmission of your car.

d. You pay $5,100 to purchase 100 shares of  Microsoft stock ($50 per share for the stock  plus a $100 brokerage fee).

e. You sell your 100 shares of Microsoft stock  (purchased for $5,000) for $6,000 minus a $100 brokerage fee.

In this question please use only one graph. This way, many students will understand the questions better and also avoid making errors.

(a) Please make a Supply and Demand graph for the Labor Market. Label the vertical axis as "Wage" and the horizontal axis as "Quantity ofLabor Demanded and Supplied". Label the Supply of Labor line as S1 and the Demand for Labor line as D1. Label the equilibrium price as $20 and the equilibrium quantity of labor as 10 million workers.

(b) Please explain which people in the economy represent the Supply of Labor.

(c) Please explain which people in the economy represent the Demand for Labor.

(d) Now decrease the Demand for Labor and label the new Demand as D2.

(e) After the Demand has decreased, estimate the Qd of Labor. _______________

(f) After the Demand has decreased, estimate the Qs of Labor. ________________

(g) In one sentence state what the Qd number in (e) above tells us.

( h) In one sentence state what the Qs number in (f) above tells us.

(i) After the Demand decreased, at the wage of $20, what situation do we have? (And use numbers to support your answer.)
(j) In one sentence state what your answer in (i) above tells us about the macroeconomy.

(k) According to Classical Economics, what would happen now in this market starting from the market situation you stated in (i). Include all the details in your answer about what happens.

(l) After the changes take place that you described in (k) above, estimate the new equilibrium wage and quantity in this Labor Market.

(m) According to Classical Economics, what type of employment situation would this Labor Market have once it achieves the new equilibrium quantity of labor in your answer for (l) above?

( n) A according to Classical Economics, what should government do to help achieve this employment situation you stated in (m) above?

You buy a book at a 20%off sale. Your state has a sales tax of 4.5%. If the book normally costs $22.50, how much do you pay fo it including tax?

Which type of unemployment was most likely affected by the computer revolution, and how?

Why is national income measurement so important to assess economic performance of a country's economy?