Economics Answers

1. Given that the price of an orange is GHC 1 and the calculated value of price elasticity of demand for an orange is -2.08.
a. Clearly state and explain the type of elasticity and the meaning of the value of price elasticity [-2.8]

Using supply and demand analysis explain the effect of equilibrium price and quantity of the following events on the market of fish
- decrease in freight carried by ship
A rise in shipping insurance premiums
A fall in a real wages paid to ship construction workers
A government subsidy for ship production

In Country B, assume that banks have no excess reserves to start with and cash drain is 50%. Assume a required reserve ratio of 10%. The Central Bank of Country B decreases the monetary base (i.e. high-powered money) by 100,000 Liras. a) Explain how this policy will affect the money supply. Calculate the change in money supply and explain how the change comes about. b) How can the Central Bank decrease the monetary base by 100,000 Liras? c) Suggest an alternative tool that the Central Bank can employ to bring about the same change in the money supply as calculated in (a). d) What policy objectives could the Central Bank be pursuing so as to want to decrease the monetary base? e) What are some limitations of the Central Bank in achieving the objectives you mention in (d)?

how poverty and inequality hinders economic development?

A monopolist faces two totally separated markets with inverse demand p=100 – qA and p=160−2qB respectively. The monopolist has no fixed costs and a marginal cost given by mc= 2 /3 q Find the profit maximizing total output and how much of it that is sold on market A and market B respectively if the monopoly uses third degree price discrimination.

In attempt to restore the economy to its long run equilibrium, the government has decided to cut spending by $20 million (decrease in government spending of $20 million) and increase its transfer payments by $30 million (increase in government transfers of 30 million). If the marginal prosperity to consume 0.67 (2/3), what will be the affect on real GDP of these two actions.

Based on the appropriate graph(s) and equation(s), explain the effects of a permanent increase in the U.S. money supply Dollar/Euro exchange rate in the short run and in the long run.

Using the fundamental equation of the monetary approach to the exchange rate (based on the absolute version of PPP), explain the effect of a rise in the domestic money supply on the long run equilibrium exchange rate

Suppose an economy is in equilibrium and initial equilibrium output equals its full-employment level, denoted Yf. Suddenly there is a temporary shift in consumer tastes away from domestic products. Show the effects of such a shift on output and exchange rate. (Hint: Use DD and AA curves)

A change in money supply affect the demand of goods and services or not. give logical reason?