Economics Homework to solve.
Macroeconomics: Assignment 2
1. ; ;What are the four components of aggregate expenditure? Which one is the largest? Which one is the most volatile?
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2. ; Draw a consumption function, and discuss its characteristics.
3. ; Disposable income and consumption expenditure (in billion dollars) of a country are given below:
Disposable income (Yd) |
Consumption |
1000 |
1200 |
2000 |
2100 |
3000 |
3000 |
4000 |
3900 |
5000 |
4800 |
a) ; Find APC and APS at Yd = $5000 billion.
b) ; Find MPC.
c) ; Find autonomous consumption.
d) ; What will be the equation of the consumption function?
e) ; What will be the consumption at Yd =$10000 billion?
4. ; Discuss the determinants, other than disposable income, that determine consumption.
5. ; Discuss the permanent income hypothesis.
6. ; Account for the low saving rate of Americans compared to people of other countries of the world. What are the consequences of low saving rate for a country?
7. ; Distinguish between proprietorship, partnership and corporation.
8. ; Distinguish between:-
a) ; Stocks and bonds
b) ; Preferred stocks and common stocks
c) ; Capitalization and market capitalization.
9. ; A corporation has $ 200 million in bonds, $ 100 million in preferred stocks, and $ 300 million in common stocks.
a) ; What is this company’s capitalization?
b) ; What is this company’s market capitalization?
c) ; How much would it take to control this company, theoretically, and practically?
10. ; Discuss the major sources of revenue and heads of expenditure of the U.S. federal government.
11. ; Distinguish between:-
a) ; Discretionary and non-discretionary expenditures.
b) ; Taxes and Subsidies
c) ; Direct and indirect taxes
d) ; Progressive, proportional and regressive taxes
e) ; Fiscal deficit and surplus
f) ; Fiscal deficit and public debt
12. ; If you earn $50,000 and pay $ 10,000 in taxes, what is your average tax rate? Suppose your income increases to $ 60,000 and taxes increase to $ 12,500, what will be your average and marginal tax rates?
13. ; Discuss the role of government in a mixed economy like U.S.A.
14. ; On the capital market of an economy, what will be the effect of the following:- (show with diagrams)
a) ; An increase in taxes (T)
b) ; Tax cut
c) ; An increase in government expenditures (G)
d) ; A decrease in G
e) ; A balanced budget increase in T and G
f) ; A balanced budget decrease in T and G.
15. ; Distinguish between (a) an open economy and a closed economy; (b) trade deficit and trade surplus.
16. ; What is the basis of international trade?
17. ; Derive the basic trade identity.
18. ; What is exchange rate? Distinguish between appreciation and depreciation of a currency. How are exchange rates determined?
19. ; Is there any relationship between fiscal deficit and trade deficit? Account for the same, using a diagram.
20. ; What is GDP? Distinguish between GDP, GNP, NDP, NNP and Green GDP. How good is GDP as a measure of standard of living of people of a country? Give reasons for your answer.
21. ; Nominal GDP of a country for different years, and corresponding GDP Deflators ; are given below:-
Year |
Nominal GDP (Billion $) |
GDP Deflator ( 2010=100) |
Real GDP (Billion $) |
2007 |
1000 |
; 95 |
|
2009 |
1020 |
; 98 |
|
2011 |
1050 |
103 |
|
2013 |
1100 |
105 |
Fill in the gaps in the above table, and find the average annual economic growth rates over
(a) ; 2007-2013 and (b) 2011-2013.
22. ; Expenditures and revenue of different sectors of an economy are given below:-
Sectors |
Expenditures (Million $) |
Revenue (Million $) |
Wheat |
Wages ; 100 |
300 |
Interest ; ;80 |
||
Dividend ; 120 |
||
Flour |
Wages ; 120 |
600 |
Interest ; 90 |
||
Dividend ; 90 |
||
Purchase of wheat ; 300 |
900 |
|
Bread |
Wages ; ;80 |
|
Interest ; 100 |
||
Dividend ; 120 |
||
Purchase of flour ; 600 |
Find GDP using (i) the final goods approach (ii) the value added approach and (iii) the income approach