Macroeconomics Answers

1. How would the classical views on the creation of wealth differ from those of the mercantilists?

8. Within the classical form of the quantity theory, the demand for money is given by

Mu = kPY

(4.7)

Suppose income (Y) is given at 400 units, and the money supply (M) is fixed at 200 units.

Suppose k drops from its initial value of 0.5 to 0.25.

What is the initial price level? What is the new price level after the change in k? Explain the

process that leads to the change in the aggregate price level.

"The International Monetary Fund has put some conditions to address Monetary, Fiscal and Structural problems that faced the Egyptian economy."

Discuss the last sentence, addressing the main problems at the Egyptian economy, and Egypt Compliance with the conditions, under IMF extended Fund Facilities.

Suppose that aggregate demand increases, starting from an equilibrium income level. This implies upwards pressure on the average consumption levels and output that increases. Since the standard of living of employees decreases owing to the higher prices, the employees will start to negotiate higher nominal wages. This is called the short-run demand adjustment process. True or False

The interaction between AS and AD over the long run is more complex. It entails that, over a period of time, the adjustments (shifts) that are set in motion tend to lead the economy and , more specifically production and employment, to a cyclically stable or cyclically neutral level of full or saturated employment. True or False

Changes in GDP are reflected in the business cycle, as well as the rate of inflation and the overall balance of payment situation. True or False

The value of the multiplier (K) depends on factors such as the marginal propensity to save (MPS), the marginal propensity to import (MPX) and the marginal ta rate (MTR). The value of the multiplier is, therefore, in practice between the values of 1 and 2. True or False

The equilibrium levels of income (Y),real investment and gross national expenditure are determined by the intersection of the AS and AD curves

True or false

1.   What are the functions of a central bank?

What is the history of money? (Step by step explain how humankind moved from barter trade to the kinds of money with have to day).