Macroeconomics Answers

Which of the following is used to measure a country’s real output per person?
[1] Nominal GDP.
[2] Current GDP per capita.
[3] Real GDP.
[4] Real GDP per capita.

anticipated inflation affects: select one: a. borrowers only. b. lenders only. c. all aspects of the economy. d. only business firms involved in investment spending.

1. Suppose the government cuts transfer payments in an economy with an inflationary gap. How would this policy affect bond prices, interest rates, investment, the exchange rate, net exports, real GDP, and the price level? Show your results graphically.

2. Given the nature of the implementation lag discussed in the text, discuss possible measures that might reduce the lag.

3. Federally funded student aid programs generally reduce benefits by $1 for every $1 that recipients earn. Do such programs represent government purchases or transfer payments? Are they automatic stabilizers?

4. The text notes that changes in oil prices can affect the inflation-unemployment outcome. Explain what effect changes in oil prices may have on these two variables.

The value of the multiplier associated with changes in autonomous spending is given by k.
a) Find the value of the multiplier when MPC=0.50, 0.75 and 0.80.
b) What is the relationship between the value of the multiplier and MPC?
c) Find the change in equilibrium level of output when there is a k10 000 increase in investment spending and MPC=0.50, 0.75 AND 0.80.

Suppose the current interest rate is 5% what price should one expect to pay for a $1000 treasury bill, due to mature in one year, which ha originally been sold when interest rate was 10%?

Which of the following define economic growth the best?
A. Continuous growth in the general price level of property of South Africa.
B. Continuous growth in the real money supply of America.
C. Continuous growth in the total real production level of China.
D. Continuous growth in the general price level of Zimbabwe.

Suppose current interest rate is 6% what price should one expect to pay for 3 month treasury bill with face value of $10000 that is one month?

Consider a bond with face value of $1000 due to mature in one years time. Its current price is $1035 the current interest rate is 5.8%. its coupon is?

PLEASE YOU SHOULD SOLVE IT QUICKLY Aggregate demand and aggregate supply schedules in Burgazistan are given as follows:

Price level Real GDP demanded Real GDP supplied in the short run
75 600 400
85 550 450
95 500 500
105 450 550
115 400 600
125 350 650
135 300 700

a) What is the short-run macroeconomic equilibrium GDP level? (5 pts)


b) What is the equilibrium price level? (5 pts)


Suppose that the initial equilibrium you found in “a” is at the long run aggregate supply curve and the economy receives a negative demand shock which decreases aggregate demand by 100 at each price level.

c) What is the new short-run macroeconomic equilibrium GDP level? (5 pts)


d) What is the output gap? (5 pts)


e) In the long-run the economy adjusts to the long-run equilibrium point.
What is long-run equilibrium GDP level? (5 pts)

PLEASE YOU SHOULD SOLVE IT QUICKLY Aggregate demand and aggregate supply schedules in Burgazistan are given as follows:

Price level Real GDP demanded Real GDP supplied in the short run
75 600 400
85 550 450
95 500 500
105 450 550
115 400 600
125 350 650
135 300 700

a) What is the short-run macroeconomic equilibrium GDP level? (5 pts)


b) What is the equilibrium price level? (5 pts)


Suppose that the initial equilibrium you found in “a” is at the long run aggregate supply curve and the economy receives a negative demand shock which decreases aggregate demand by 100 at each price level.

c) What is the new short-run macroeconomic equilibrium GDP level? (5 pts)


d) What is the output gap? (5 pts)


e) In the long-run the economy adjusts to the long-run equilibrium point.
What is long-run equilibrium GDP level? (5 pts)