Macroeconomics Answers

C= 450 +0.4Y
I=350
G=150
X=70
Z= 35+0.1Y
T= 0.15Y
Yf= 1550

Calculate the tax revenue to the government of this country when this economy remains in equilibrium

C=450+0.4Y
I=350
G=150
X=70
Z=35+0,1Y
T=0.15Y
Yf=1550

Calculate the level of autonomous spending in this economy

Explain, with the aid of a graph, the demand‐pull inflation. In your answer, consider the following:
 Graphical illustration of the demand‐pull inflation (5)
 Provide any three of your own examples/scenario that might cause the demand‐pull
inflation (6)
 Recommend the policy tools to use in order to curb each type of inflation mentioned
above (4)

Consider an open economy with a fixed price level in which investment, export, import and government spending are assumed to be autonomous. Consumption is directly and linearly related to disposable income while tax is directly and linearly related to national income.



a) Work out the multiplier with change in investment [8 marks]

b) If investment increases by N$30m, marginal propensity to consume is 0.7, tax rate is 0.3 and marginal propensity to import is 0.1, by how much will national income increases or decreases? [8 marks]

If the supply curve is perfectly elastic and the demand is linear and downward sloping, what is the effect of a K1 specific tax collected from producers on equilibrium price and quantity? (explain with the aid of a diagram)

What are economic benefits of improving air Quality in South Africa

Consumption expenditure (C) 9 000
Investment (I) 6 500
Government spending (G) 7 000
Exports (X) 1 800
Imports (Z) 2 400
Depreciation 700
Foreign payment to the rest of the
world 300
Foreign payment from the rest of the
world 250

Q.7.2.1 Calculate the value of the country’s GDE (Gross Domestic
Expenditure).
Q.7.2.2 Compute the value for the country’s GDP (Gross Domestic Product)
at market price.
(2)
Q.7.2.3 Determine the value of the country’s NNI (Net National Income) at
market price.
(3)
Q.7.2.4 If it is predicted that the GDP will increase to 22 000 in 2020,
calculate the growth rate between 2019 and 2020.
(3)
Q.7.2.5 The measure of GDP for economic growth is not always perfect.
Describe any two problems that are associated with GDP as a
measure of economic growth.

with the aid of a graph, the demand‐pull inflation. In your answer, consider the following:
 Graphical illustration of the demand‐pull inflation (5)
 Provide any three of your own examples/scenario that might cause the demand‐pull
inflation (6)
 Recommend the policy tools to use in order to curb each type of inflation mentioned
above (4)

Use the information to answer the questions that follow:
C = 450 + 0.4Y
I = 350
G = 150
X = 70
Z = 35 + 0.1Y
T = 0.15Y
Yf = 1550


Q.2.5 Calculate what the new equilibrium income should be if the government of this
country decides to cancel all taxes, implying the tax rate would now be 0%.
(6)
Q.2.6 Before the government decreased the tax rate, how much of government
spending was required to bring the economy to full employment?

a) Does an increase in the price of imported Belgian chocolate affect the CPI or the GDP deflator more? Why