Search & Filtering
Question 1
Discuss what a financial system is and the key role that any financial system plays in an economy. What are the main reasons for regulating financial institutions and how do the regulators do this?.
General guide :
Work should be at least 4 pages excluding the title page and references.
50marks
Consider the effects of a government employment subsidy whereby the government paid 10 percent of the wages of newly hired workers. How would employment and output be affected by the program in the classical model? What would be the effect on the position of the aggregate supply schedule in Figure 3-6(Ch 3 Froyen)?
Consider the market for two goods that substitutes,such as pens and pencils. If a technological breakthrough reduced the cost of producing pens
a. What would happen to the supply of pens?
b. What would happen to the price of pens and the quantity demanded?
c. What effect would this change in the price of pens have on the market of pencils
Suppose that, due for example to reconstruction after a war , the capital stock of a nation increases. Use the graphical framework of Figure3-4(CH 3 Froyen) to illustrate the effect that the increase in the capital stock would have an output, employment and the real wage in the classical model.
Provide examples of demand -side factors that would not affect the level of output and employment .
In microeconomics, we expect the supply curve for the firm to slope upward to the right when drawn against price .The classical aggregate supply curve is based on this microeconomic theory of the firm but is vertical .Why?
We termed the classical view of the labor market an auction market. What assumptions underlie this characterization ?
Suppose that the public's taste changes in such a way that leisure comes to be more desirable than commodities. How would you expect such a change to affect output, employment, and the real wage in the classical model ?
Explain the relationship between profit maximization condition and the labor demand as shown by equation MPNi=W/P?(Froyen CH 3 Eq-3.4)
Explain the possible causes of unemployment and explain which is responsible for most of the unemployment in your country.(12 mrks)
