Economics Answers

Define "Coordination Failure"?

2) [3 points] Suppose an economy is initially at its long-run equilibrium and aggregate demand increases. How do price level, real GDP and nominal wage rate change in the short run?


3) [3 points] What happens to real GDP and the price level when oil prices rise in the short run? Assume that initially the economy is at its long-run equilibrium.


4) [3 points] What happens to real GDP and the price level, if the country receives a positive demand shock and a negative supply shock simultaneously? Discuss only the short run equilibrium. Assume that initially the economy is at its long-run equilibrium.


5) [3 points] Explain how a recessionary gap would still be eliminated even if the government and the central bank do not intervene.

1) Candiland is a closed economy, that does not trade with the rest of the world. Their autonomous consumption expenditure is $80 million, and the marginal propensity to consume is 0.5. Investment spending is constant at $100 million, and government expenditure is constant at $80 million. There are no income taxes.

a) What is the autonomous aggregate expenditure i.e. AE0?
b) What is the slope of the aggregate expenditure i.e. AE1?
c) What is the size of the multiplier in this economy?
d) What is the value of aggregate planned expenditure when real GDP is $800 million?
e) What can you say about the inventories when real GDP is $800 million?
f) What is the economy's equilibrium aggregate expenditure?
g) If a stock market boom increases autonomous consumption expenditure to $100 million, how would the equilibrium aggregate expenditure change?

1. Calculate the equilibrium level of income if C = R100 million + 0,8Y and Ī = R125 million.[5

6. UK’s real GDP was 1 360 trillion pounds [£] in 2009 and 1 434 trillion pounds in 2010. UK’s population was 191.5 million people in 2009 and 193.3 million in 2010.
Calculate.
a. the economic growth rate.[3]
b. The growth rate of real GDP per person [5]
c. The approximate number of years it takes for real GDP per person in the UK to double if the 2010 economic growth rate and population growth rate are maintained.[4]

bought in 2010. The average household spent $60 on juice and $30 on cloth in 2009 when the price of juice was $2 a bottle and the price of cloth was $5 a meter. In the current year, 2010, juice is $4 a bottle and cloth is $6 a meter.
Calculate
a. CPI per basket [3] and
b. the inflation rate[3].

Can determination of foreign exchange rate be found by change in demand or supply method i.e. without changing price? Plz give the solution of this answer also if it can be determined without this chge in price

Y=C+I+G+Xn+Md
C=a+bYd
I=¢Y-Li
Xn=to-mYd
Md=M1+M2Y
Yd=Y-Tx+Tr
Tx=T#+KY
G=Go
I=g+fY
Establish the structural equation

Suppose that the government increases tax and government purchases by equall amount what happens to the interests rate and investment in reponse to this balance budget changes

What is the formula to calculate private and public savings