Economics Answers

Discuss whether a government should encourage an increase in savings.

The value of the multiplier associated with changes in autonomous spending is given by k.
a) Find the value of the multiplier when MPC=0.50, 0.75 and 0.80.
b) What is the relationship between the value of the multiplier and MPC?
c) Find the change in equilibrium level of output when there is a k10 000 increase in investment spending and MPC=0.50, 0.75 AND 0.80.

Malawi and Zambia each produce both tobacco and maize in thousands of tons, as shown below
Tobacco Maize
Malawi 20 200
Zambia 10 150
Malawi appears to have an absolute advantage in the production of both commodities. Would you advice that trade should still take place between the two countries? Justify your answer.

In a close private economy the level of planned investment is 300 and the savings function is S=-100 +0.25Y. The equilibrium level of income and consumption respectively is

How can an economy benefit from the removal of agricultural protection?

How can governments fixed costs are high and marginal costs are close to zero?

The Z-score uses multiple corporate income and balance sheet values to measure the financial health of a company. Assess the credit risk (z-score) of a potential borrowing firm with the following financial ratios: X1 = 0.2, X2 = 0, X3 = 0.2, X4 = 0.1, X5 = 2.0

Effect of monetary theory on liquidity trap

macroeconomics is aggregate of what happen at micro level. Would it be possible for what happens at the macro level to differ from how economic agents would react to some stimulus at micro level.

On the basis of an assessment of the current and evolving macroeconomic
situation, the Monetary Policy Committee (MPC) reduced the policy repo rate
under the liquidity adjustment facility (LAF) by 40 bps to 4.0 per cent from 4.40
per cent with immediate effect. Assess the present liquidity scenario in India and
give your opinion about the impact of this reduction on money supply and also
suggest other measures that RBI can take in recent times to maintain
liquidity.