Other Economics Answers

In what way was Ricardo’s law of comparative advantage superior to Smith’s theory of absolute advantage? How do gains from trade arise with comparative advantage?

What are the basic questions that we seek to answer in this chapter? In what way is the model presented in this chapter an abstraction or a simplification of the real world? Can the model be generalized? 

Part One: Attempt all of the following questions

2, Researcher is using data for a sample of 10 observations to estimate the relation                       between consumption expenditure and income. Preliminary analysis of the sample data produces the following data.

 Sum (xy=700), (sum x square = 1000), (sum x=100), (sum Y= 200)

A, Use the above information to compute OLS estimates of the intercept and slope    coefficients and interpret the result

B, Calculate the variance of the slope parameter

C, Compute the value R2 (coefficient of determination) and interpret the result 

D, Compute 95% confidence interval for the slope parameter 

E, Test the significance of the slope parameter at 5% level of confidence using t-test

3. If the model Yi=( +(1X1i +(2X2i +Ui is to be estimated from a sample of 20 observation using the semi- processed data given in matrix in deviation form.

             =10, =25 and 

Obtain the OLS estimate of the above parameters. 

Chose the best answer to each question?

23. If Total Poverty Gap is $5,000, the number of persons whose income fall below the poverty line is 200, and the size of population is 1,000, then what is the Average Poverty Gap? 

 (a) $5       (b) $250      (c) $1 million     (d) $10 

24. Which of the following is included into the computation of both Gender Development Index(GDI) and Gender Inequality Index(GII)? 

(a) women’s educational attainment   (b) women’s life expectancy at birth

 (c) women’s participation in the workforce (d) women’s income per person  

25. Which of the following can have a value bigger than 1? 

(a) Gender Inequality Index         (b) MPI

(c) Gini coefficient             (d) Normalized Poverty Gap

(e) Gender Development Index

Given the money demand function,

In [M/P]^D = a - bi + InY , if b = 1/3 and S = 0.03Y , what rate of money growth is required to obtain it?

How will your answer(s) change when: (a) b = 1/3 and S = 0.05Y

Explain the relationship between seigniorage revenues and the rate of inflation. Also Draw relevant diagram(s).

4. Linearity is one assumption of classicalist in simple regression analysis. Identify which of the following satisfies this assumption. Discuss why?

a, LnY2=( +(1X1i +(2X2i +Ui

B, Y=( +(1/(1) X1i +(2X2i +Ui

C, Y=( +(1X21i +(2X2i +Ui

D, LnY=( +(1LnX1i +(2LnX2i +Ui

e. Yi=( +(2Xi + Ui

•         define fiscal policy

•         mention the instruments of fiscal policy

•         explain the difference between M1, M2 and M3

•         differentiate between money, income and wealth

•         explain why credit cards are not seen as money

•         explain the basic function of a financial intermediary

•         explain a demand determined money supply

•         define the demand for money

•         mention the motives for holding money and the main determinant of each

•         define monetary policy

•         list the market-oriented monetary policy instruments

•         list the non-market-oriented monetary policy instruments

•         define the repo rate

•         list the functions of money

•         define money

•         list the properties of money

•         list the functions of the SARB