In April 2025
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The economy of Beta is in a recession.
(a) Draw a single correctly labeled graph with both the short-run and long-run Phillips curves. Label the initial short-run equilibrium as point X.
(b) Identify a combination of fiscal and monetary policy actions that can be used to restore full employment.
(c) Draw a correctly labeled graph of the money market and show the effect of the monetary policy action identified in part (b) on the equilibrium nominal interest rate.
(d) Based on the change in the equilibrium nominal interest rate identified in part (c), what will happen to aggregate demand in the short run? Explain.
(e) On your graph in part (a), label a point Z that shows the effect of the change in aggregate demand identified in part (d).
(f) Now assume the economy is in long-run equilibrium. If the central bank pursues a policy of increasing the money supply at an annual rate of 5 percent, what will happen to inflation and real output in the long run? Explain using the quantity theory of money.
Elaborate on the various economies and diseconomies of scale. Find articles with companies expanding or restructuring due to economies and diseconomies of scale.
The production possibility curve represents?
Price elasticity of demand gives a measure of how sensitive or responsive the _____ of a good or service is to a change in the ___ of a good or service
If a 5 per cent fall in the price of bananas results in a 2 per cent increase in the quantity of bananas demanded, then the price elasticity of the demand for bananas is relatively low.
A. True
B. False
Essay Questions:
1. Discuss the usefulness of microeconomic analysis for the private (business) sector. You must use specific examples to support your argument.
2. Discuss the major components of a microeconomic model of your choice.
3. Discuss the two major theorems of welfare economics and their limitations. You can use diagrams where relevant.
4. Discuss the major flaws of perfectly competitive markets. How do these flaws provide the basis for the government's intervention in the economy?
5. Discuss the three major functions of the government.
Why is a monopolist's marginal revenue less than the
price of its good? Can marginal revenue ever be
fire Explain.
b. Find the equilibrium level of income when
Co = 85, b = 0.75, Io = 30, t = 0.2, and T = 20
Given following data for the demand of movie tickets, calculate the price elasticity of demand when the prices changes from period :
1- A to B.
2- B to C.
3- C to B (by using midpoint elasticity method)
And find the degrees of elasticity for them.
The period
Price of ticket
Quantity of demand for tickets
A
7
100
B
8
90
C
9
75
What do you infer from this statement “ The consumer is no longer required to make a choice
between price and quality, and competitiveness in quality is not only central to profitability,
but crucial to business survival”.
