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- Solve the following questions.(1). Consider the following macroeconomic model of Tropicana. Y = C +1+G. . C = 90 + 0.9Y... | = 900-900R... G = Go.... M (0.9Y-90OR) P. . ...(Income identity) .... (Consumption) . (Investment) . .(Government) .. (Money market Equilibrium) %3D %3D %3D | Y = aggregate real output, R = the interest rate, M = the money supply and P = the price level. Limit figures to one decimal place when answering the questions below except where many zeros are Y%3D %3D involved. (a)Tropicana has been described as a closed economy. What does this mean? Is this evident from the macroeconomic description of Tropicana? (b)Derive the expression for aggregate real output Y. (c)Briefly explain why the expression in part (b) is an aggregate demand equation (curve). (d)Find the equilibrium value for real output if money supply is $800, government spending is $1000, and the price level is unity (1). (e)Sketch the aggregate demand curve in part(b) for P = 1, 2, 3, 4, insert a full employment aggregate supply…11. The U.S. economy slowed significantly in early 2008, and policy makers were extremely concerned about growth. To boost the economy, Congress passed several relief packages (the Economic Stimulus Act of Act of 2009) that combined would deliver about $700 2008 and the American Recovery and Reinvestment billion in government spending. Assume, for the sake of argument, that this spending was in the form of payments made directly to consumers. The objective was to boost the economy by increasing the disposable income of American consumers. a. Calculate the initial change in aggregate consumer spending as a consequence of this policy measure if MPC in the United States is 0.5. Then calculate the resulting change in real GDP arising from the $700 billion in payments. 76177 b. Illustrate the effect on real GDP with the use of a graph depicting the income-expenditure equilib- rium. Label the vertical axis “Planned aggregate spending, AE Planned" and the horizontal axis "Real GDP." Draw two…
- Provide a concise topic introduction on the causes of recession during 2007 to 2009 in the United States?12. What are the three primary measures used in macroeconomics to assess the performance of an economy? 1) 2) work and actively seeking work. The opportunity cost of ( of goods and services that could have been produced if the unemployed workers would have worked. ) provides an overall indicator of output or production in the economy _) is the state a person is in if he or she cannot get a job despite willing to ) is the production _) tracks the overall increase in the level of prices in the economy. Each 3) ( measure is important for tracking the short-run and long-run health of the economy and for creating macroeconomic models to address important policy questions.43. Which of the following variables does NOT cause business cycles, according to classical economics? (A) Technological growth. (B) Immigration. (C) Capital accumulation. (D) Money supply. 44. Suppose that there is a sudden fall in consumption. What happens to the economy in the long-run? (A) A fall in output and a fall in prices. (B) A rise in prices. (C) A rise in output. (D) A fall in prices but not in output.
- Analyse the impact of these events on the price level and total output of an economy in the short term. If policymakers were to use monetary policy to actively stabilize the economy, in which direction should they move the money supply and interest rate and show the effects of these policies? Please discuss your answers with appropriate graphs. - (a) The government raises taxes and reduces expenditures to balance its budget. (b) Enterprises in the economy are pessimistic about the economy in the future. - (c) Foreigners increase their taste for domestically produced beef. (d) The money wage rate rises.9) Refer to the following table. What was the approximate output gap in 1983? Year 1980 1981 1982 1983 1984 0.5% 1% 2.2% 2% Real GDP (billions of $) 175 182 189 196 202 Potential GDP (billions of $) 179 185 188 194 198[1] The Kuznet's hypothesis has played an important role in shaping policy. (b) The Kuznet's hypothesis has often led policy makers to focus exclusively on economic growth. Drawing upon empirical evidence discuss the validity of such policy.
- 8. You are given with some economic data of Economy A in 2021. Answer this question using the economic data given. Economic data Economy A Nominal GDP growth rate 300% Real GDP growth rate 2% Identify the major short term economic problem facing Economy A. Provide evidence from the table to support your answer. а. b. What is the main cause for the problem in part a? Explain how it leads to the problem. Suppose you were the chairperson of the central bank, what kind of policy с. could you adopt to tackle the problem in part a? How does the policy work? Explain your answer.4. Consider the macroeconomic balance sheets of the following economies. As a policy analyst what would be your monetary and fiscal policy advice in both cases? Explain your answer. Country A Country B GDP Growth Rate: 7% GDP Growth Rate: 0.5% Inflation: 9% Inflation: 2.1% VIX Index (Equity Market Volatility Index): 99 VIX Index (Equity Market Volatility Index): 63 Unemployment: 5% Unemployment: 7% Exchange Rate Volatility: High Exchange Rate Volatility: Low Budget Deficit and Government Borrowing as a share of GDP: High Budget Deficit and Government Borrowing as a share of GDP: High Oil Exporter: Yes Oil Exporter: NoConsider the macroeconomics process/perspective. 1). Do you think it helps the economy to implement macroeconomic theories, ideas? Why? Why not? 2). Do you think that the macroeconomic theories and ideas are relevant to you? why? why not? 3). Do you think that macroeconomic ideas produce an economy that is more unequal across citizens? Why? Why not? 4). Do you think macroeconomic theories and ideas are too old fashioned for our current economy? Why? Why not?