Macro economics homework help

Macro Economics Homework Help Macro Economics Assignment Help

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About Macro Economics:

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The term macro economics is derived from the Greek word Macro meaning large. This domain of economic study deals with the performance and structure of the economy as a whole rather than that of the individual markets. Macroeconomic study deals with the economic indicators like the GDP (Gross Domestic Products), rates of unemployment, and the methods by which these indicators interplay to impact the functioning of the whole economy. Macro economics homework help deal with the development of the models which explain the relationships between certain economic parameters like the national income , rate of inflation, international trade, the business cycles, of savings and consumption etc.

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Macro Economics Homework Sample Questions and Answers:

Question 1. Find out the equilibrium level of national income when autonomous consumption is $100. MPC is 0.8 and autonomous investment is $50. Ans. Y=C+1 And

C = a + by

∴

Y = a + bY + 1

Or

y = 100 + 0.8Y + 50

Or

y -0.8y = 150

Or

0.2Y = 150

∴

Y

=

1 0.2

×

150

Y=C+1 Or

Y = a + bY + 1

Or

Y â&#x20AC;&#x201C;bY = a + 1

Or

Y(1 â&#x20AC;&#x201C;b) = a +1

Or

y=

1 1â&#x2C6;&#x2019;đ?&#x2018;?

(a + 1)

Now putting the values of a, b and 1 Y= =

1 0.2

1 1â&#x2C6;&#x2019;0.8

. ) (100 + 50)

Ă&#x2014; 150

= 5 Ă&#x2014; 150 =$750.

Question 2. Calculate the GDP in a closed economy with no government where C = 100 + 0.8Y and 1 = 1000. Ans.

Y=C+1 = 100 + 0.8Y + 1000

or

Y – 0.8Y = 100 + 1000

or

0.2Y = 100 + 1000

or

Y=

1100 0.2

×5

Question. 3. Show the equilibrium level of GDP where I is 1000, a is 100 and b is 0.75. = C+1 = a + bY + 1 = 100 + 0.75 Y + 1000 Or

Y – 0.75 = 1000 + 100

Or

0.25Y = 1100 Y=

1100 0.25

= 1100 × 4 = 44.00

Question.4. If the consumption function is given by the equation C = 100 + 0.8Y i. ii. iii.

What is the saving function? At what level of income saving will be zero? If is equal to 1000, at what level of income saving will be equal to investment?

Ans. (i)The Saving function when C = 100 + 0.8Y S=Y–C = y – ( 100 + 0.8Y) = y – 100 – 0.8Y = -100 + 0.2Y (ii) Level at which saving will be zero when Y=C Y–C=0 Or

Y – (100 + 0.8Y) = 0

Or

Y – 100 – 0.8Y = 0

Or

Y – 0.8Y = 100 0.2 Y = 100 Y=

100 0.2

= 500 At Y = 500. C = 100 + 0.8(500) = 500 Thus Y – C = 500 – 500 = 0. (iii) When 1 is 1000, the level at which S = 1 will be S=1 Putting the value of S from part (i) and given value of 1 = 1000 -100 + 0.2Y = 1000 0.2Y = 1000 + 100 Y=

1100 0.2

= 5500 When Y = 5500, saving is S = -100 + 0.2 (5500) S =-100 + 1100 = 1000 Which is equal to 1 given value of 1 =1000?

Question.5. Using Saving Investment equality, find out the equilibrium level of national income when autonomous consumption is $100. MPC is 0.8 and autonomous investment is $50. Ans. National Income equilibrium is attained where S=1 And

as = -a + ( 1-b )Y

Putting the given values -100 + (1 -0.8)Y = 50 (1 – 0.8Y) = 50 + 100 0.2Y = 150 Y=

1 0.2

× 150

Or

Y = 5 × 150

i.e.,

Y = 750

Saving out of this income would be S = -a + (1 –b)Y = -100 + (1 – 0.8) 750 = -100 + 0.2 × 750 = -100 + 150 =$50 Thus at income level of $750 S = 1 = $50.

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