Macroeconomics Answers

Potential GDP is determined by the size of the labor force, the stock of capital and the state of technology used in the production process. Assume that the country faces a pandemic and there is a considerable decline in the size of the labor force, the stock of capital and the state of technology used in the production process.  Use an AD/AS diagram to illustrate potential GDP both before the pandemic and months after the start of the pandemic where the foregoing decline was observed and documented.

if mpc is 0.2 and investment increase by 200000000 what is increase income

C: 360+0.8Yd. I: 640-6r. T:100. G: 160

Drive IS curve

Henry Ford famously mass-produced cars at the beginning of the twentieth century, starting Ford Motor Company. He made millions because mass production made cars cheap to make, and he passed some of the savings to the consumer in the form of a low price. Cars became a common sight in the United States thereafter. Keeping total revenue and its relationship with price in mind, do you expect the demand for cars to be elastic or inelastic given the story of Henry Ford?

Do you expect the demand for cars to be elastic or inelastic? Why?

Discuss two likely causes of an increase in demand for cars in Kigali.