problem 1: Describe the method of money creation by commercial banks.
problem 2: Draw a straight line consumption curve. From it derive the savings curve describing the process. Show this by using a diagram:
a) Level of income at which Average Propensity to Consume is equivalent to one.
b) Level of income at which Average Propensity to Save is negative.
problem 3: What is meant by the term cash reserve ratio?
problem 4: Describe the meaning of underemployment equilibrium. Illustrate the two policy measures that the government can take to make the economy reach full employment equilibrium.
problem 5: What causes an upward movement all along a demand curve of a commodity?
problem 6: Determine the price elasticity of supply of a commodity whose straight line supply curve passes via the origin forming an angle of 75°?
problem 7: What change will occur in the marginal product, when total product rises at a diminishing rate?
problem 8: Illustrate the meaning of the marginal cost.