Macro economics assignment should answer any 5 questions Pin It Answer any five (5) of the following questions. Each question is worth 10 marks. Question 9: [Parts (a) to (g), ½ mark each; parts (h) and (i), 1 mark each; parts (j), (k) and (l), 1.5 marks each] Suppose the following are National Accounts data for a given year for some particular country: Measure / Variable Amount (Billions of Dollars) Consumption of fixed capital 320 Gross private fixed capital formation 785 Government consumption expenditures 585 Government investment expenditures 210 Imports of goods and services 565 Exports of goods and services 690 Household consumption expenditure 3115 Net property and other income paid overseas 34 Returns to labour 2651 Firm profits 1687 Other factor rentals 482 (a) Calculate GDP using the Income method: (b) Calculate GDP using the Expenditure method at market prices: (c) Calculate Gross National Expenditure (GNE): (d) Calculate Net Domestic Product (NDP): (e) Why might NDP be a better measure of economic performance that GDP: (f) Calculate Gross National Product (GNP): (g) Calculate Net National Product: (h) Calculate Current Account Balance: (i) Calculate Gross National Savings: (j) If tax revenues are $17 Billion for the fiscal year, then what is the value of national savings? (k) If mpcd remains at 0.63 and GDP changes to $4873 billion; then what will the new level of domestic consumption be? (l) If exports then increase by $4 billion, private sector investment decreases by $3 billion; and government consumption and investment decrease and increase by $3 billion and $4 billion respectively; by how much will GDP change and what will its new value be? Question 10: (a) Which of the following are final goods and services and which are intermediate goods and services? Please explain why in your answer. (4 marks – 1 mark each) (i) A windscreen purchased by a motor vehicle spare parts supplier; (ii) A new bulldozer to be used by a construction company; (iii) A household cleaning service purchased by a family from a domestic cleaning service company; (iiii) Coking coal (b) An economy produces final goods and services with a market value of $870 billion in a given year, but only $720 billion worth of goods and services is sold to domestic or foreign buyers. Is this nation’s GDP $870 billion or $720 billion? Explain your answer. (2 marks) (c) Explain why a new truck sold for use by a mining company is a final good, even though it is a fixed investment (capital) used to produce other goods. (2 marks) Should the value of this truck then be added to GDP or should only the goods it transports be included in GDP? Explain your answer. (2 marks) Question 11: (a) Illustrate and explain with diagrams the difference between demand-pull and cost-push inflation; (5 marks total – 1.25 marks for each diagram and 1.25 marks for the explanation); (b) Provide (describe) two (2) causes of each type of inflation (5 marks total – 1.25 marks for each demand-pull cause plus 1.25 marks for each cost-push cause) Question 12: (a) Do you think that macroeconomic policy should be designed to achieve a measured unemployment rate of zero? Why or why not should this be the case? (2.5 marks, 1.25 marks for each part) (b) How did the classical economists interpret long-run unemployment? (2.5 marks) (c) How does structural and cyclical unemployment differ and how concerned should policymakers be about these types of unemployment? (2.5 marks) (d) Describe the essential differences between the Keynesian and monetarist approaches to the workings monetary policy. Make sure that your explanation includes the relevant assumptions. (2.5 marks) Question 13: (1.25 marks for each correct diagram and 1.25 marks for each correct explanation) Using the aggregate demand – aggregate supply (AD-AS) diagra

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