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INTERMEDIATE MACROECONOMICS ECO 3002 ASSIGNMENT GROUPS: BBA FIN3, EBBA3, EBBA FIN4
INSTRUCTIONS:
1. The paper is divided in four sections 1, 2, 3 & 4.
2. All questions are compulsory.
3. These questions comprise of problem solving exercises and short essay questions and
contribute to 16% of your final grade.
4. All assignments are COMPULSORY and should be type written (inclusive of graphs)
and submitted in a portfolio. 5. Each cover page should have the PARTICIPATING individual group member’
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INTERMEDIATE MACROECONOMICSECO 3002 ASSIGNMENTGROUPS: BBA FIN3, EBBA3, EBBAFIN4
INSTRUCTIONS:
1.
The paper is divided in four sections 1, 2, 3 & 4.2.All questions are compulsory.
3.
These questions comprise of problem solving exercises and short essay questions andcontribute to 16% of your final grade.
4.
All assignments are COMPULSORY and should be type written (inclusive of graphs)and submitted in a portfolio.5.Each cover page should have the PARTICIPATING individual group member’snames and their ID numbers.
6.
This portfolio is due the week of
November 8-12, 2010
in your respectivetutorial sessions. Each group should comprise of a maximum of 4-5 persons.7.READ ALL QUESTIONS CAREFULLY!
Assignment 1
1.
Refer to the information provided in Table below to answer the questions that follow for theMacrovian economy. All quantities are given in millions of Macrovian dollars (M$).
a)
Calculate gross private investment. (1 mark)
b)
Calculate Macrovian GDP. (2 marks)
c)
Calculate gross national product (GNP). (1 mark)
d)
Calculate net national product (NNP). (1 mark)
e)
Calculate domestic national income. (1 mark)
f)
Calculate personal income. (1 mark)
g)
Calculate disposable personal income. (2 marks)
Assignment2
From Mankiw 6
th
edition textbook
chapterpagequestionmarks82422. #1 a-c 103. # 4 a-c10
4. Two countries, Highland and Lowland, are described by the Solow growth model. Bothcountries are identical, except that the rate of labor-augmenting technological progress is higher in Highland than in Lowland.
a)
State and graphically show in which country is the steady-state growth rate of output per effective worker higher? (4 marks)
b)
Explain in which country is the steady-state growth rate of
total output
higher? (1marks)
Assignment 3
From Mankiw 6
th
edition textbook
chapterpagequestionmarks103015. #1a-c106. #2a-d10
7.Suppose the country Condupta have an income-expenditure model of the form:C = 50 + 0.85Yd Yd = Y – T T = 400I = 150G = 300EX = 80IM = 10 + 0.05Y
a)
Compute the equilibrium values of Y, C, and IM. (3 marks)
b)
Verify your answer by showing that Y* = C* + I* + G* + (EX* - IM*), where “*”denotes equilibrium value. (1/2 mark)
c)
Compute and state the slope of the aggregate expenditure function. (1/2 mark)
d)
Compute the government spending multiplier for the economy. (1 mark)e)At equilibrium Y, is the government budget in surplus or deficit, and by how much?(1 mark)
f)
Assume that G increased by 200, compute the new equilibrium output. (1 mark)
g)
Draw a carefully labeled aggregate expenditure diagram using information found in (a)and (e) identifying the old and new equilibrium. Be sure to label thei. the axes; ii. the curves ; iii. The initial values;iv. the direction the curves shift; and v. the terminal values. (3 marks)8a.
An economy is initially at the natural level of output. There is an increase in government
spending. Use the IS-LM model to illustrate both the short-run and long-run impact of this policychange. Wwhere AB represents the short run and AC represents the long run. (3 marks)8b. Explain in words the short-run and long-run impact of the change in government spending onoutput and interest rates. (2 mark)
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