Economics Answers

Assume that V is constant, M grows at an annual rate of 5%, Y at a rate of

2% and r= 4%.

a)

What will be the nominal interest rate?

b) How will the nominal interest rate change when the CB increases the

growth rate of money supply by 2 percentage points?

c) Assume that the growth rate of Y drops to 1%.

• How will the inflation rate change?

• What must the CB do to ensure that the inflation rate does not change?

Explain the effect of transfer payments like workers remittances on current account

why would countries having trade surpluses operate on foreign debt?

1.    Do you know the assumptions which underlay the consumer’s preferences? Explain them.

Given the following information on price of Maize flour (MF) 10$, the price of Rice (R) as 15$ and income of consumer 150$ when the consumer needs to maximize his utility function  

Analyze the following graph on consumer behavior, through

Explaining the line/curve A and C

Explain the role of foreign reserves in the balance of payment account

Discuss the effects of lower taxes in the Keynesian model on the general equilibrium.

Demonstrate that money is neutral in the long-run, but not in the short run in the Keynesian model

Explain the macroeconomic policy analysis convergence point of the classical and Keynesians

Discuss an application of the Keynesian theory of business cycles and macroeconomics stabilization.

In the 1970s and early 1980s, it seemed that Keynesian policy did not work, sparking economic policy debates. discuss