Ask Question, Ask an Expert


Ask Macroeconomics Expert

Answer all the given problems:

problem 1:

a) If you woke up in the working and found that nominal GDP has doubled overnight, what statistic would you require checking before you start to celebrate: Why?

b) Why do the economists use real GDP instead of nominal GDP to gauge economic well-being?

c) Describe critically GDP as a measure of the economic welfare.

problem 2: How each of the given events is likely to influence GDP?

a) Environmental laws prohibit the firms from emitting pollution.

b) Strikes by trade unions.

c) Discovery of new seed raises farm harvest.

problem 3: Siankanga, a farmer grows a bushel of wheat and sells it to a miller for K 1.00. The miller turns the wheat into flour and then sells the flour to a baker for K 3.00. The baker uses the flour to make bread and sells the bread to households for K 6.00. The households eat the bread. Find out the value added in each phases of production? What do you mean by GDP?

problem 4: Construct a model of loanable funds market in a closed economy.

a) Describe the effect of an increase in the Government Budget Deficit on the rate of interest and the level of private investment. Recognize the crowding out effect in this context.

b) Assume that investment is perfectly interest inelastic. Describe the crowding out effect for an increase in the govt. budget deficit.

c) If saving is perfectly inelastic then what will be the crowding out effect for a raise in the government budget deficit.

problem 5: Define the term velocity of money. Describe the role of velocity of money in the quantity theory of money.

b) ATM card raises the velocity of money; True or false. Validate.

problem 6: Describe the process of credit creation by the commercial banks. Describe in this context the statement that an individual bank has little capability to expand the money supply unless all the other banks expand in step’.

problem 7: The total value of loan in an economy is K400 million and the reserve ratio is 20 %. A raise of K15 million in the money which the public keeps in commercial banks altogether with a raise of the reserve ratio to 25 % will raise the total amount of loans by K50 million. True or false? Describe.

problem 8: By using Simple Keynesian Model, describe the effect of the given:

a) A raise in government expenses.

b) A reduction in lump sum taxes.

In this context compare the government expenditure multiplier with tax multiplier.

problem 9: Assume that the economy is characterized by the given structural equations:

C = 160 + 0.6 (4 –T)

I =150; G = 150; T = 100.

a) Find out the equilibrium output level.

b) If G increases to 200, what is the equilibrium level of output? Determine the value of the government expenditure multiplier?

c) If tax drops to 50, by how much will equilibrium output increase? Determine the value of tax multiplier?

problem 10: In mainstream economics, it is argued that firms invest more when interest rates drop as it lowers their cost of financing. Keynes, though, argues something a little different. He says, ‘A fall in the rate of interest stimulates the production of capital goods not because it reduces their costs of production however as it raises their demand price’. How is this so?

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M96638

Have any Question? 

Related Questions in Macroeconomics

Refoection 550 wordswrite a 525-word weekly reflection that

Refoection 550 Words Write a 525-word weekly reflection that includes the following: o Identify the most effective economic system you discussed in your collaborative discussion. Topic: FREE MARKET • Explain what makes i ...

Why are most environmental resources un-priced or

Why are most environmental resources un-priced (or under-priced) and what are the consequences of this? Under what circumstances is it desirable to monetize priceless environmental amenities? Briefly describe three metho ...

Note that pnbsp nbsp nbsp nbsp nbsp nbsp nbsp nbsp nbsp

Note that P                           2001                2002                2003    M s                     100                  105                  111   Y                     1000                1110                ...

This question concerns income distribution say that a

This question concerns income distribution. Say that a country's income is split into quartiles as follows: 1st: 10%, 2nd: 15%, 3rd: 20%, and 4th: 55%. a. Draw the Lorenz curve from this data. b. Compute the Gini coeffic ...

A number ofnbspcurrency crisesnbsphave affected certain

A number of  currency crises  have affected certain countries, which have also resulted in contagion in the sense that the crises affected neighboring countries. In a critical essay,  select a country (or countries) affe ...

Emergency supply of electricity to the engineering

Emergency supply of electricity to the Engineering Building 1. Study the electricity demand. Find out a generator and its suitability for this case. Get price from at least two manufacturers (catalog & figure). Show the ...

Assume bubba is a risk-averse individual with a concave

Assume Bubba is a risk-averse individual with a concave utility function. He has an 60% chance of being healthy and earning an income of $250,000. He has a 40% chance of being sick and having his income fall to $10,000. ...

Nettie can produce either 8 cupcakes or 4 hamburgers becky

Nettie can produce either 8 cupcakes or 4 hamburgers. Becky can produce either 4 cupcakes or 8 hamburgers. Suppose that Nettie and Becky each specialize in the production of the good for which they have a comparative adv ...

Suppose the economy is in long-run equilibrium with real

Suppose the economy is in long-run equilibrium, with real GDP at $16 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases the money supply by 6%. Illustrate the short run effe ...

The affordable care act is expected to help increase access

The Affordable Care Act is expected to help increase access to health care. Health insurance exchanges will be an important part of that. Most people get health insurance through their employers. But people without this ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen