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Macro Economics Assignment | Macro Economics Homework Help

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About Macro: Macro

economics is the

branch of economics

that deals with the

study of performance,

structure and

behaviour of the entire

economy on the basis

of certain indicators

such as GDP,

employment rate,

price indices etc.

Macroeconomists develop models that explain the relationship between such factors

as national income, total output, consumption,

unemployment, inflation, savings, investment, international trade and international finance.

Macro economics assignment help is a very broad field as compared to Micro economics.

Micro economics is confined to a single firm or consumer & its behaviour. But Macro

economics focuses on the behaviour of a economy as a whole. It is the study of

understanding the causes of short long fluctuation in the national income and the

determinants of long run economic growth.

Macro Economics Problems and Solutions

Problem (A): Suppose the level of autonomous investment in an economy is $100crores

and consumption function is c=100+0.8y

i) Find out equilibrium level of income.

ii) Write the corresponding saving function and verity the equilibrium level.

Solution:

i) We know that at equilibrium

Y= C+I

= 100+0.8Y+100

=> 0.2Y=200

=> Y = $1000 Crores.

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II) S=-a+ (I-b) Y

=-100+ (I-0.8) Y=-100+0.2Y

At equilibrium,

S=I

=>-100+0.2Y=-100

=>0.2Y=200

=>Y=$1000 Crores

Problem (B): For the saving function S=-500+0.2Y at what level of income.

i) Saving will become Zero.

ii) Saving will be equal to investment, if the autonomous investment is $100 crores.

How the equilibrium level of income changes, if autonomous investment increases to $150

crores.

Solution:

i) S =-500+0.2Y=0

=> 0.2 Y =500

Y=2500crores

Hence, saving will become zero, when the level if income is $2500 crores.

ii) Saving is equal to investment at equilibrium therefore,

S=-500+0.2Y =I0 =100

=>0.2 Y=600

Y=rs3000 crores

When autonomous investment rires to $150 crores, at new equilibrium level

S=-500+0.2Y=150

=>0.2 Y=650

=> Y=3250 Crores

Problem (C): Using basic equation Y = C+I, find the equilibrium level of income, if a =$50

crores, b = 0.75 and I = $2,000 crores.

Solution: We know that

Y = C+I =a+bY+I = 50+0.75Y+2,000

At equilibrium level of income

Y = 2050+0.75Y

=> 0.25 Y = 2050

=> Y = $8200 crores.

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