Economics Answers

Assume the following data for the economy in the United States:

• Inflation is at 4.5% and has been rising for the last 3 years from a low of 1.2%
• Unemployment is at 4.0% and has been falling for the last 6 years from a high of 7.8%
• The GDP is at $15.36 trillion and has been growing at about 3% for the last 7 years.


Answer the following questions using the data above. EXPLAIN ALL YOUR ANSWERS IN DETAIL.


1. What problem is the economy facing?
2. Assume you are a governor on the Federal Reserve Board of Governors. What type of policy (Easy Money or Tight Money) would you recommend to fix the problem you identified in question 1?
3. Which monetary tool will the Federal Reserve rely on to carry out the policy you recommended in Question 2? Why is it the “tool of choice?” How does it work?
4. What could happen in the economy that might make that policy choice ineffective?

A Which of the following is not a macroeconomic objective?
1.Price stability 2.Budget surplus 3.Economic growth 4.Equitable distribution of income
B If GDP is less than GDE( gross domestic expenditure) , then
1.The country has a surplus on the current account 2.Exports are less than imports 3.The country is consuming less than it is producing 4.The country is a net export
C. Which of the following countries have the highest inequality? Important:Change all the values to the same measurement, that is, either change the Gini coefficients to Gini indexes(or vice versa) and then compare the values
1 Brazil with a Gini coefficient of 0,52
2 India with a Gini index of 33,3
3 South Africa with a Gini coefficient of 0,65
4 China with a Gini index of 37,0

Which of these is an indicator of increased economic growth in a nation?

Questions:
1-Explain why certain firms practice price discrimination. (3 marks)
2-What is the fundamental difference between state-supported firm monopoly and monopoly that develops in the market. (Give reference to the current situation in SOUTH AFRICA at Eskom also list one advantage and one disadvantage of state supported firm monopoly).6 marks

NB:reference list (bibliography)
:citation (text reference)

Question:
1-Economists say that firms maximise profit by producing at a level of output where marginal cost is equal to marginal revenue.The owners of a firm respond, "that's a lot of nonsense.I do not even know what marginal cost and marginal revenue mean. How can i be doing something i don't even know about?" How would you react to this response?(5 marks)

NB:reference list (bibliography)
:citation (text reference)

Questions:
1-what type of firm is the cartel?
2-what is a cartel?

NB:reference list (bibliography)
:citation (text reference)

When my company issues a cheque for insurance does the bank account debit or credit

Consider the real exchange rate. Suppose that the nominal exchange rate is 30, which is 10% lower than the level predicted by the absolute PPP. Answer how much the real exchange rate is.

Use the information provided below, for Snow Plumbing Services, which uses the
periodic inventory system, to answer question 7:
R
Inventory (1 July 20.7)……………………….................................. 150 000
Cash purchases……………………………………………………....
Credit purchases……………………………………………………...
Purchases returns…………………………………………………....
15 000
6 000
2 000
Freight inwards………………………………………………………..
Freight outwards………………………………………………………
Settlement discount received………………………………………..
Settlement discount granted…………………………………………
1 200
1 800
1 700
2 500
Inventory (31 July 20.8)……………………. 120 000
Additional information:
The owner of Snow Plumbing Services donated taps and basins to the value of R1 000 to the
local crèche on 16 June 20.7. No entries regarding this transaction was made in the accounting
records of Snow Plumbing Services, yet.
34
ASSIGNMENT 01 (continued)
7. The cost of sales is …
R
(1) 47 500
(2) 17 300
(3) 10 300
(4) 19 000
(5) 18 000