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Q. What do you mean by multiplier effect?
Loans and deposits in banks give rise to a significant multiplier effect. We use a simple instance to explain this effect. Consider the bank K-bank with total deposits of 10,000 (millions or whatever). K-bank is aiming for a reserve ratio of 10% of deposits. At the instance it has lent 9,000 and has 1,000 in reserve - exactly meeting their desired reserve ratio.
Suppose you have the following information about a closed economy: C = 50 + 0.80 (Y-T) I = 200 G = 100 a) Find out the equilibrium level of income. b) Suppose G in
a small country produces 5000 units of output and has a money suplly of $2000. if citizens want to hold 10% of their income in money ie k=0.1 what are v, $gnp, p and real money sup
it has been argued that economic development of developing countries has been held back by a persistent fall in the terms of trade of developing countries over the long run
Consider the following: An economy is found to have output, y = 20000 Also assume that the government runs a deficit where tax revenue T= 4000 and government expenditures G=5000
Consider a model of Cournot competition as studied in class, with 2 firms and a linear inverse demand function P(Q) = a - Q (where Q = q 1 + q 2 is the total quantity produced by
List the 3 factors that determine the price elasticity of demand? State the factor that determines the price elasticity of supply?
In the keynesian cross model, assume the consuption function is given by C=200=.75(Y-T) and planned investment=100, government purchases and taxes are each of them 100. a) Draw a g
Macroeconomics usually deals with the behaviour of aggregates of economic variables. An economic variable is a magnitude whose value may changes. Important variables in macroeconom
Separation of growth and fluctuation It is very useful to separate the evolution of a variable which grows over time into a trend and fluctuations around the trend. The graphs
Suppose the demand and supply for milk is described by the following equations Qd=600-100P; Qs=-150+150P Where P is the price in rand, Qd is the quantity demanded in millions of l
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