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Suppose you are earning $22,000 a year working as a sales representative for a T-shirt manufacturer. At some point you decide to open a retail store of your own to sell T-shirts. You invest $20,000 of savings that has been earning an interest income of $1000 per year. You decide that your new firm will occupy a small store that you currently own and have been renting out for $5000 per year.
A year after you open the store you total up your accounts and find the following:
Total sales revenue……………………………………………………$120,000
Cost of T-shirts……………………………..$40,000
Clerk’s salary………………………………. 18,000
Utilities (bills from hydro, internet, etc.)………5,000
a. What are the total explicit costs?
b. What are the total implicit costs?
c. According to an Accountant, what is your annual profit?
d. What is your annual
A year after you open the store you total up your accounts and find the following:
Total sales revenue……………………………………………………$120,000
Cost of T-shirts……………………………..$40,000
Clerk’s salary………………………………. 18,000
Utilities (bills from hydro, internet, etc.)………5,000
a. What are the total explicit costs?
b. What are the total implicit costs?
c. According to an Accountant, what is your annual profit?
d. What is your annual
MC curve is a mirror image of MP curve..explain it with economic reason.
Discuss the impact of the consumer experience an increase in income economic events on the equilibrium price and quantity according to the demand and supply model
Economics
Examine the effect of an expansionary fiscal policy and highlight its effectiveness in the
economy within the Keynesian Cross-Model. [11 marks]
b) Outline two shortcomings of the model in a). [4 marks]
economy within the Keynesian Cross-Model. [11 marks]
b) Outline two shortcomings of the model in a). [4 marks]
Economics
1. Consider an economy with the following equations.
C= 0.8 (1- t) Y
t= 0.25
I= 900 – 50i
G = 800
L= 0.25Y – 62.5i
M=2,500
P= 5
Where;
C is Consumption function, t is Marginal propensity to tax, I is Investment function, G is
autonomous Government expenditure, L is liquidity Preference, M is money stock and P is the
average price level.
a) Derive the IS curve relation for this economy. [3 marks]
b) Derive the LM curve relation for this economy. [3 marks]
c) Based on your answer in a) and b), interpret the nature of slopes of the IS and the LM curves.
[3 marks]
d) Determine the equilibrium output and real interest rate for this economy? [3 marks]
e) Suppose government increases its expenditure to 1,000. Calculate the new equilibrium
output and new interest rate at this level. [3 marks]
C= 0.8 (1- t) Y
t= 0.25
I= 900 – 50i
G = 800
L= 0.25Y – 62.5i
M=2,500
P= 5
Where;
C is Consumption function, t is Marginal propensity to tax, I is Investment function, G is
autonomous Government expenditure, L is liquidity Preference, M is money stock and P is the
average price level.
a) Derive the IS curve relation for this economy. [3 marks]
b) Derive the LM curve relation for this economy. [3 marks]
c) Based on your answer in a) and b), interpret the nature of slopes of the IS and the LM curves.
[3 marks]
d) Determine the equilibrium output and real interest rate for this economy? [3 marks]
e) Suppose government increases its expenditure to 1,000. Calculate the new equilibrium
output and new interest rate at this level. [3 marks]
Economics
With reference to two examples each, explain the difference between demerits goods and
mixed goods. [6 marks]
(b) Discuss whether government adoption of advertising campaign or taxes is more effective in
arriving at the correct price of demerit goods.
Economics
Ansaful is a small community in the Winneba Municipality and the residents want to build a
market facility. The total cost of the project is GHC 10,000. Out of this figure, the Christian
population in the community is willing to contribute GHC 5,000 while the Muslim population in
the community is willing to contribute GHC 3,000. However, their budget is inadequate to cover
the cost of the project.
a) What type of good does the market facility in question represent? Explain [3 marks]
b) State the prediction of the economic model to the above problem. [3 marks]
c) Explain whether the model in b) is adequately justified with reference to the extract. [3
marks]
d) Determine the magnitude of the budget deficit of the project. [2 marks]
e) Explain two ways in which the budget deficit of the project can be financed. [2 marks]
f) Outline two practical challenges you may encounter using this model. [2 marks]
market facility. The total cost of the project is GHC 10,000. Out of this figure, the Christian
population in the community is willing to contribute GHC 5,000 while the Muslim population in
the community is willing to contribute GHC 3,000. However, their budget is inadequate to cover
the cost of the project.
a) What type of good does the market facility in question represent? Explain [3 marks]
b) State the prediction of the economic model to the above problem. [3 marks]
c) Explain whether the model in b) is adequately justified with reference to the extract. [3
marks]
d) Determine the magnitude of the budget deficit of the project. [2 marks]
e) Explain two ways in which the budget deficit of the project can be financed. [2 marks]
f) Outline two practical challenges you may encounter using this model. [2 marks]
Consider an individual who immigrates to Canada and deposits $7 comma 500 into the Canadian banking system. Suppose that all commercial banks have a target reserve ratio of 20 percent and that individuals do not hold any cash from the loans borrowed from the banking system.
The eventual total change in deposits of the banking system after this impact is $
nothing.
The eventual total change in reserves of the banking system after this impact is $
nothing.
The eventual total change in loans of the banking system after this impact is $
nothing.
Now suppose that all commercial banks still have a target reserve ratio of 20 percent, but that individuals choose to hold cash equal to 5 percent of their bank deposits.
In this case, with the cash drain, the eventual total change in deposits of the banking system after the impact is $
nothing.
We can conclude from this example that the ability of the banking system to create money is
▼
reduced
amplified
by the presence of a cash drain.
The eventual total change in deposits of the banking system after this impact is $
nothing.
The eventual total change in reserves of the banking system after this impact is $
nothing.
The eventual total change in loans of the banking system after this impact is $
nothing.
Now suppose that all commercial banks still have a target reserve ratio of 20 percent, but that individuals choose to hold cash equal to 5 percent of their bank deposits.
In this case, with the cash drain, the eventual total change in deposits of the banking system after the impact is $
nothing.
We can conclude from this example that the ability of the banking system to create money is
▼
reduced
amplified
by the presence of a cash drain.
If there is excess reserve along with target reserve ratio and cash drain, how it will be treated?
A subgame-perfect equilibrium:
Select one:
a. is not a Nash equilibrium; it is a refinement of Nash equilibrium.
b. is an equilibrium concept used in simultaneous games.
c. is a special sort of Nash equilibrium.
d. can be ruled out using backward induction.
Select one:
a. is not a Nash equilibrium; it is a refinement of Nash equilibrium.
b. is an equilibrium concept used in simultaneous games.
c. is a special sort of Nash equilibrium.
d. can be ruled out using backward induction.
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#339914 on Dec 2023
#339914 on Dec 2023