 |
IMA612S-INTERMEDIATE MACROECONOMICS-1ST OPP-NOV 2024 |
|
|
1 Page 1 |
▲back to top |
nAmlBIA UnlVERSITY
OF SCIEn CE Ano TECHn OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCE AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ECONOMICS
QUALIFICATION CODE:
07BECO
LEVEL: 7
COURSE CODE: IMA6 l 2S
COURSE NAME: INTERMEDIATE
MACROECONOMICS
SESSION: NOVEMBER 2024
DURATION: 3 HOURS
PAPER:THEORY
MARKS: 100
FIRST OPPORTUNITY QUESTION PAPER
EXAMINER(S) MR. P. NANGULA
Ms. N N Shitenga
MODERATOR
INSTRUCTIONS
I. Answer ALL questions.
2. Number your answers in accordance with the question paper.
3. Write clearly and legibly
PERMISSIBLE MATERIALS
I. Pen
2. Ruler
3. Calculator
THIS QUESTION PAPER CONSISTS OF _3_ PAGES (Including this front page)
|
|
2 Page 2 |
▲back to top |
QUESTION ONE
a) Use relevant examples to explain the following concepts:
1. Working age population
ii. Labour force
111. Unemployment rate
[25 MARKS]
[10 marks]
[3 marks]
[3 marks]
[4 marks]
b) Use the information in the table to answer part a) to d) below:
[15 marks]
Factor cost =N$1500
Production taxes = N$800.00
Production subsidy = N$550.00
Product taxes= N$650.00
Product subsidy = N$450.00
Sum of all GVA at factor cost =N$2000.00
a)· Basic price
b) Market price
c) GDP at Factor Cost
d) GDP at Market Price
[4 marks]
[3 marks]
[3 mark]
[5 marks]
QUESTION TWO
[25 MARKS]
A country with only two goods (good A and good B). The quantity of output and price are provided
in the table below.
2015
2016
2017
Price
Output
Price
Output
Price
Output
Good A N$150.00 780
N$167.00 799
N$179.00 810
GoodB N$367.00 1500
N$398.00 1580
N$435.00 1687
a) Compute nominal GDP in each year.
[6 marks]
b) Compute real GDP in each year using 2015 as the base year.
[6 marks]
c) Compute GDP deflator for each year.
[6 marks]
d) Use GDP deflator to compute the inflation rate from 2015 to 2016, and from 2016 to 2017.
[4 marks]
e) Mention two possible ways to increase GDP.
[3 marks]
QUESTION THREE
[25 MARKS]
Consider a small open economy that is described by the following information: Tax =0.2Y;
Investment= 1500; consumption =200 + 0.6Y d; Export is 1500; import= 150+0.1 Y; Government
spending= 900.
a) Calculate equilibrium national income.
[ 10 marks]
b) Calculate consumption level, tax level and import level at equilibrium national income.
[6 marks]
|
|
3 Page 3 |
▲back to top |
c) If government want to increase equilibrium national income by N$100.00 and they can only
achieve this by increasing its spending, by how much government must increase it spending
to achieve that objective?
[5 marks]
d) Using the knowledge of multiplier effect, how do you conclude that government is running a
balance budget?
[4 marks]
QUESTION FOUR
[25 MARKS]
a) Demand function for real money balance is L(y, r) = 150 - 1Or, where r is the interest rate in
percent. The money supply is N$ l 000 and the price level is N$ l 0.
i) Graph the supply and demand for real money balances.
[6 marks]
ii) What is the equilibrium interest rate in the money market?
[3 marks]
iii) Assume that the price level is fixed. What happens to the equilibrium interest rate in
the money market if the supply of money is reduced from N$ l 000 to N$800?[ 6 marks]
b) Consider the following short-run model of closed economy where C=l0+0.9Yd; I= 5-5r; G =
T= 100; money supply 1600 and price is 10; L(y,r) = Y- r
i) Derive IS and LM equation using information above
[8 marks]
ii) Draw IS and LM curve.
[2 marks]
All the Best
|
|
4 Page 4 |
▲back to top |
n Am I BI A u n IVE Rs ITY
OF SCIEn CE Ano TECHn OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCE AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ECONOMICS
QUALIFICATION CODE:
07BECO
LEVEL: 7
COURSE CODE: IMA612S
COURSE NAME: INTERMEDIATE
MACROECONOMICS
SESSION: NOVEMBER 2024
DURATION: 3 HOURS
PAPER:THEORY
MARKS: 100
FIRST OPPORTUNITY MEMORANDUM
EXAMINER(S) MR. P. NANGULA
MS. N N Shitenga
MODERATOR
INSTRUCTIONS
I . Answer ALL questions.
2. Number your answers in accordance with the question paper.
3. Write clearly and legibly
PERMISSIBLE MATERIALS
I. Pen
2. Ruler
3. Calculator
THIS QUESTION PAPER CONSISTS OF_ 4_ PAGES (Including this front page)
|
|
5 Page 5 |
▲back to top |
QUESTION ONE
[25 MARKS]
a) Use relevant examples to explain the following concepts:
[l Omarks]
i. Working age population
[3 marks]
The working age population is defined as those aged 15 to 64. This indicator measures
the share of the working age population in total population.
ii. Labour force
[3 marks]
The labor force, or workforce, is ihe total number of people within a given population
who are currently employed plus the number of people who are unemployed and
actively seeking work.
iii. Unemployment rate
[4 marks]
The unemployment rate measures the share of workers in the labor force who do not
currently have a job but are actively looking for work. People who have not looked/or
work in the past four weeks are not included in this measure. It is important to keep in
mind that the rate measures the percent of unemployed job seekers in the laborforce-
the sum of employed and unemployed persons-and not the entire population.
b) Use the information in the table to answer part a) to d) below:
[15 marks]
Factor cost =N$1500
Production taxes = N$800.00
Production subsidy = N$550.00
Product taxes= N$650.00
Product subsidy = N$450.00
Sum of all GV A at factor cost =N$2000.00
a) Basic price
Basic price= 1500 + 800- 550 = 1750
b) Market price
Market price =1750 +650-450 = 1950
c) GDP at Factor Cost
GDP at factor cost = 2000
d) GDP at Market Price
GDP at Market Price= 2000+ 800+650-550-450 = 2450
[4 marks]
[3 marks]
[3 mark]
[5 marks]
QUESTION TWO
[25 MARKS]
A country with only two goods (good A and good B). The quantity of output and price are provided
in the table below.
2015
2016
2017
Price
Output
Price
Output
Price
Output
Good A N$150.00 780
N$167.00 799
N$179.00 810
Good B N$367.00 1500
N$398.00 1580
N$435.00 1687
a) Compute nominal GDP in each year.
Nominal GDP 2019 = 150 x 780 + 367 x 1500 = 667,500
Nominal GDP 2020 = 167 x 799 + 398 x 1580 = 762,273
[6 marks]
Nominal GDP 2021 = 179 x 810 + 435 x 1687 = 878,835
b) Compute real GDP in each year using 2019 as the base year.
[6 marks]
|
|
6 Page 6 |
▲back to top |
Real GDP 2015 = 667500
/2 marks]
Real GDP 2016 = 150 x 799 + 367 x 1580 = 699,710
[2 marks]
Real GDP 2017 = 150 x810 +367 x 1687 = 740,629
/2 marks]
c) Compute GDP deflator for each year.
(6 marks]
GDP dejlator 2015 = 100
/2 marks]
GDP dejlator 2016 = 762273/699710 x 100 = 108.94
/2 marks]
GDP dejlator 2017= 878835/740629 xl00 = 118.66
/2 marks]
d) Use GDP deflator to compute the inflation rate from 2015 to 2016, and from 2016 to 2017.
(4 marks]
Inflation rate (2015 -2016) = 8.94%
Inflation rate (2016 - 2017) = 8.92
/2 marks]
[2 marks]
e) Mention two possible ways to increase GDP.
Increases in general prices
Increases in production
(3 marks]
QUESTION THREE
[25 MARKS]
Consider a small open economy that is described by the following information: Tax =0.2Y;
Investment= 1500; consumption =200 + 0.6Y d; Export is 1500; import= 150+0.1 Y; Government
spending= 900.
a) Calculate equilibrium national income.
Y= 200 + 0.6Y- 0.6(.2Y)+l500+900+ 1500-/150+0.lY]
0.62Y=3950
(10 marks]
Y= 6370.96
b) Calculate consumption level, tax level and import level at equilibrium national income.
(6 marks]
Consumption= 200 +0.6(6370.96)-0.6*.2(6370.96)= 3258.08
Tax= 0.2*6370.96 = 1274.2
Import= 150+0.1*6370.96 = 787.1
c) If government what to increase equilibrium national income by N$100.00 and they can only
achieve this by increasing its spending, by how much government must increase it spending
to achieve that objective?
1
LlY = Q.@tiG
[5 marks]
100
=
1
O. 62
LlG
LlG= 62.
d) Using the knowledge of multiplier effect, how do you conclude that government is running a
balance budget?
[4 marks]
When the multiplier is equal to one, we expect the increase in income to be equal to the
increase in government spending, which is funded by equal increase in tax revenue.
|
|
7 Page 7 |
▲back to top |
QUESTION FOUR
[25 MARKS]
a) Demand function for real money balance is L(y, r) = 150 - IOr, where r is the interest rate in
percent. The money supply is N$ l 000 and the price level is N$10.
i) Graph the supply and demand for real money balances.
[6 marks]
150
ii) What is the equilibrium interest rate in the money market?
150-l0r = 100
,.= 5%
[3 marks]
iii) Assume that the price level is fixed. What happens to the equilibrium interest rate in
the money market if the supply of money is reduced from N$1000 to N$800?[6 marks]
Will increase to 7% or by 2%
b) Consider the following short-run model of closed economy where C=10+0.9Yd; I= 5-5r; G =
T= 100; money supply 1600 and price is 1O; L(y ,r) = Y- r
i)
Derive IS and LM equation using information above
[8 marks]
Y= 10+0.9y-90+5-5r+100
0.lY= 25-Sr
Y = 250 -50r IS equation
Y = 160 + r LM equation
ii) Draw IS and LM curve.
[2 marks]
Interest rate
5
M curve
160
250
National income
All the Best