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Introduction To Macroeconomics

The document outlines a test for an Introduction to Macroeconomics course, scheduled for submission by 18:00 on 11/09/2024. It includes questions on calculating nominal and real GDP, GDP deflator, inflation, liquidity traps, and the government multiplier. Students are instructed to submit their answers in a specified format to a provided email address.

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Jimmy Sikachelela
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12 views1 page

Introduction To Macroeconomics

The document outlines a test for an Introduction to Macroeconomics course, scheduled for submission by 18:00 on 11/09/2024. It includes questions on calculating nominal and real GDP, GDP deflator, inflation, liquidity traps, and the government multiplier. Students are instructed to submit their answers in a specified format to a provided email address.

Uploaded by

Jimmy Sikachelela
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Introduction to Macroeconomics Test

Date: 11/09/2024
Due Time: Today before 18:00
Total CA 1: 20 Marks
Send : jsikachelela@gmail.com
Format of Saving: Number-SIN-Name of course (Scan your answers)

Question One

Suppose the economy of Kabwe District produces 3 different goods. The following table shows
the prices and quantities of each good consumed in 2019, 2020 and 2021.
Year P Fish Q Fish P Meat Q Meat PTomato QTomato
2019 8 400 8 225 10 70
2020 9 550 7 250 12 270
2021 10 900 6 275 15 270

a. Calculate nominal GDP in each of the three years. (1.5 Marks)


b. Calculate Real GDP in each of the three years, using 2019 as the base year. (1.5 Marks)
c. Calculate the GDP deflator for each of the three years. (1.5 Marks)
d. Calculate inflation for 2020 and 2021. (1.5 Marks)

Question Two

With the aid of the graph, define the term “Liquidity trap” and explain the two (2) causes of
liquidity trap (4 Marks)
List and explain the three (3) key determinants of the value of the multiplier (3 Marks)

Question Three

The ratio of ∆Y to ∆G is called the Government multiplier. It can be derived, as follows, from
the equilibrium condition (Y = C + I + G) together with the consumption equation (C = a + bY).
∆Y 1
Show that, Y = C + I + G and C = a + bY can derived to = (4 Marks)
∆ G (1−b)

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