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Review the last year’s COVID19 supplementary budget of Fiji (available online) and discuss if the initiatives are adequate to mitigate the pandemic. Discuss the drawbacks, and explain how they may be improved
Assets
Liabilities
Reserves K 1,500
Loans K 3,500
Initial Deposit K 5,000
Assume required reserve ratio is 10 percent and that 100% of all the loans are deposited as new deposits.
iv. By how much can the bank increase its loans?
At the end of the credit creation process, what will be the final value of the deposits
a) A hypothetical economy is given by the following identities:
C = 3000
I = 2000
G = 2500
T = 0.2Y
MPC = 0.5
X=6500
Z=5500 + 0.2Y
i. Find the equilibrium level of income.
ii. If investment expenditure decreases by 100, what will be the change in Y?
iii. Using the initial values, if G increases by 300 what will be the new level of Y?
a) A simple closed economy with an mpc equal to 0.5. Investment spending has suddenly fallen, reducing aggregate demand and output to a level that is 100 million below Y*.
ii. If the government, instead, decided to try to get the economy to full employment using only a lump-sum tax cut how big of a tax cut would be needed?
iii. If the government decided to try to get the economy back to full employment using only an increase in transfers, how large would this increase need to be?
Product
2004
2005
2006
Quantity
Price
Quantity
Price
Quantity
Price
Maize
500
20
510
25
550
27
Cotton
220
10
600
12
580
18
Cassava
800
30
700
35
750
35
ii. Calculate real GDP for each year using 2004 as the base year.
iii. Calculate the GDP deflator for each year taking 2004 as the base year.
iv. Calculate the GDP growth rates for the years 2005 and 2006.
assess lessons that Ghana draw on from other developing economies around the globe to transform the industrial sector.
1. Suppose you are provided with the following data on the components of aggregate expenditure of Ghana in the year 2020. Consumption function (C) = Gh¢2000m + 0.65Yd Tax function (T) = Gh¢1400m + 0.2Y Gross private domestic investment (I) = Gh¢1800m Government expenditure (G) = Gh¢1970 Exports (X) = Gh¢1300m Imports function (M) = Gh¢1220m + 0.2Y Use the following data above to compute the following: h) What is the value of national savings at equilibrium GDP i) If the full employment output level of the economy is Gh¢9000m, what output gap does Ghana find itself. j) Using a single diagram show (d) and (i) k) By how much should government spending change and in which direction to get the economy to full employment. What sort of fiscal policy is this? l) What will be the fiscal stance of government at full employment level given the fiscal policy pursued in (k) above? m) Will the fiscal policy in (k) above have an impact on the trade balance, national savings? Why?
1. Suppose you are provided with the following data on the components of aggregate expenditure of Ghana in the year 2020. Consumption function (C) = Gh¢2000m + 0.65Yd Tax function (T) = Gh¢1400m + 0.2Y Gross private domestic investment (I) = Gh¢1800m Government expenditure (G) = Gh¢1970 Exports (X) = Gh¢1300m Imports function (M) = Gh¢1220m + 0.2Y Use the following data above to compute the following: a) Marginal propensity to consume (MPC) out of national income b) Marginal propensity to save (MPS) out of national income c) The savings function as a function of national income d) What is the value of the equilibrium level of output: i. Using the aggregate expenditure approach ii. Using the injections leakages approach. e) What is the value of autonomous spending multiplier? f) What is the fiscal stance (the budget balance) of the government at equilibrium GDP? g) What is the nature of the trade balance at equilibrium GDP
Briefly explain the meaning of each equation in the above model. What are the values of d Y C , r I , LY and S Nw . Give economic interpretation of each.
Assume the reduction in the tax rate earlier this year has already increased savings deposited by Fijians with the banks by $1 billion dollars. The banks decide to keep 20% of these new deposits as reserves
