Economics Answers

If the supply corn is Qn=a+BP and the supply by the rest of the world is Qr=c+episode what is the world supply? What is the world inverse supply?

Estimated demand function for processed pork is Q=171-20p+20pb+3pc+2y. Using the estimated demand function for processed pork, show how quantity demand changes at a given price as per capital income ,Y, increases by $ 100 a year?

Suppose the marginal propensity to consume (MPS) equals 0.20, an increase in autonomous investment of $100 will lead to an increase in real Gross Domestic Product (GDP) by:

How has the PPI behaved since the year 2000?

QUESTION 1
Explain, with the use of demand and supply diagram(s), the difference between a change in quantity demanded of hats and a change in demand for hats. (4 Marks)
QUESTION 2
Explain, with the use of demand and supply diagrams, the effect of the following events on the market for solar panels:
• The price of solar panels has fallen to below the market equilibrium price.
• The price of electricity for an average household has increased by 50 percent.
• New technology has increased the productivity of solar panel producers.
(2 + 2 + 2 = 6 Marks)
QUESTION 3
Assume new medical research has proven that consuming oranges will prevent heart attacks, whilst at the same time; a typhoon destroys 60 percent of the orange crop. Explain, using demand and supply diagram(s), the impact on the equilibrium price and quantity in the market for oranges? (4 Marks)
QUESTION 4
If the price of a good increase from $6 to $9, leading to a fall in quantity demanded from 55 to 35 units, what is the price elasticity of demand for the good at this price range? Interpret the calculated elasticity value and explain the impact of the price rise on total revenue.
(6 Marks)

Suppose Mr. Y deposits AED 100,000 into a one year Certificate of Deposit at 5% interest.
The Central Bank sets the reserve ratio for the banks at 10%.
a) illustrate how the bank creates money with the help of the given information. Show first five steps.
b) calculate the total money creation in the economy with the help of formula.

Commercial banks in United Economy have total deposits of AED 300 billion. Their reserves are AED 15 billion, two thirds of which are with Central Bank as deposits. There are AED 30 billion notes outside the banks. There are no coins!
Calculate-
a) The monetary base.
b) The banks reserve ratio.
c) Currency drain as a % of deposits

____ is not one of the factors aside price that can affect supply curve.

Assume that workers, employers and investors all believed that inflation in the coming year would equal the annualized rate of inflation experienced in the past 6 months. Also assume that workers had been receiving nominal wage gains of 5% during a several year period where the annual inflation rate was 2%. Now assume that a decline in the unemployment rate below NAIRU creates conditions where workers push for an annual real wage increase of 4%. Also assume that labor productivity growth declines to 1% per year as unemployment is squeezed below normal frictional & structural levels.
a)what rate of nominal wage growth will workers seek at the new low unemployment rate?

b) how fast will firms have to raise prices given your answer in (a) in order to protect profit margins?

c) if the rate of inflation in (b) occurs and the Fed allows AD to grow fast enough to maintain the unemployment rate below NAIRU for another year, what rate of nominal wage growth will workers seek in the following year?

d) if the rate of inflation in (b) had persisted for 6 months or more, how large an increase in the federal funds rate would be needed to increase the level of real interest rates in the economy?

The short-run marginal and average variable cost curves for a competitive firm are given by MC = 2+ 2q and AVC = 2 + q, respectively. The profit-maximizing level of output for a firm (q) is 4 and its total fixed cost (TFC) is $18. Which of the following must be true about the firm?

a) The firm is charging a price of $4 and covering its average variable cost, hence it should continue operating in the short-run.
b) The firm is charging $10 and will remain in the industry in the short run; but it is not covering its total costs and will consider leaving the industry in the long run.
c) The firm is charging a price of $4 and making a short-run loss, hence it should shut down immediately.
d) The firm is charging a price of $15 and making a zero profit, hence it should shut down eventually.
e) The firm is charging a price of $16 and making a negative profit, hence it should exit the industry in the long-run.