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.Assume the price of good Y rises from Birr 120 to Birr 160 per Kg. and as a result, the consumer demand for good X increases from 50 Kg to 90 Kg. Calculate the cross elasticity of demand of X for Y. 9. Suppose price of a good falls from Birr 12 to Birr 10 per unit, as a result its quantity demanded increases from 100 to 120 units. A) Find price elasticity of demand, and demand for a good is elastic, inelastic, or unit elastic. B) Calculate TR (Total Revenue) at price Birr 12 & 10. C) What is the relationship between TR and price elasticity of demand?
The quantity supplied of a commodity at a price of Birr 10 per unit is 500 units. Its price elasticity of supply is 0.5 A) Calculate the price at which its quantity supplied is 600 units. B) What quantity of this commodity will the seller supplied when the price rise at Birr 12 per unit? C) What quantity of this commodity will the sellers supply when price rises by Birr 4 per unit?
Consider the following equations for a small open economy for both the goods and money markets.
C = 3000 + 0.8Yd; T = 1000 + 0.3Y; G = 6000; TR = 500; I = 4000 + 0.24Y – 100r; M = 3000 + 0.2Y; X = 2000; LP = 1000 + 0.15Y; LT = 2000 + 0.25Y – 15r; Ls = 1000 – 35r; MS = 40,000; P= 4
a. Derive both the IS and LM equations for the economy and compute the Equilibrium level of Income and Interest Rate.
b. At this equilibrium level of income and interest, compute the levels of disposal income, total transactions demand for money, investment demand and the value of net exports.
c. Suppose the government raises govt. expenditure by 20% in order to increase aggregate demand. Show how this policy results in the crowding out effect.
What is the main causes of monopoly power of producers in an economy
compare and contrast the difference between perfect competition market and monopolistic market in an economy
Consider the following equations for a small open economy for both the goods and money markets.
C = 3000 + 0.8Yd; T = 1000 + 0.3Y; G = 6000; TR = 500; I = 4000 + 0.24Y – 100r; M = 3000 + 0.2Y; X = 2000; LP = 1000 + 0.15Y; LT = 2000 + 0.25Y – 15r; Ls = 1000 – 35r; MS = 40,000; P= 4
a. Derive both the IS and LM equations for the economy and compute the Equilibrium level of Income and Interest Rate.
b. At this equilibrium level of income and interest, compute the levels of disposal income, total transactions demand for money, investment demand and the value of net exports.
c. Suppose the government raises govt. expenditure by 20% in order to increase aggregate demand. Show how this policy results in the crowding out effect.
Suppose you are a manager of a County government project that is meant to provide rent-regulated housing units in low-income settlements. Using your knowledge of equilibrium, advice the Governor whether this policy will be a success.
Suppose you are a manager of a County government project that is meant to provide rent-regulated housing units in low-income settlements. Using your knowledge of equilibrium, advice the Governor whether this policy will be a success.
Consider the following equations for a small open economy for both the goods and money markets.
C = 3000 + 0.8Yd; T = 1000 + 0.3Y; G = 6000; TR = 500; I = 4000 + 0.24Y – 100r; M = 3000 + 0.2Y; X = 2000; LP = 1000 + 0.15Y; LT = 2000 + 0.25Y – 15r; Ls = 1000 – 35r; MS = 40,000; P= 4
a. Derive both the IS and LM equations for the economy and compute the Equilibrium level of Income and Interest Rate.
b. At this equilibrium level of income and interest, compute the levels of disposal income, total transactions demand for money, investment demand and the value of net exports.
c. Suppose the government raises govt. expenditure by 20% in order to increase aggregate demand. Show how this policy results in the crowding out effect.
a. Discuss using the IS-LM framework, how President Uhuru’s tax cuts and Central bank’s expansionary monetary policy may steer the economy out of Recession caused by Covid-19. Ensure that you draw diagrams and discuss the long run effects too. b. Answer True or False, then justify your response with practical economic examples:
i. Open Market Operations are more effective in a developing country like Kenya when compared with the Bank Rate Policy.
Since Quantitative credit control instruments are more targeted and more objective, it is always advisable that they be applied at all times over the Selective instruments
