a. In December, the price of Christmas trees rises, and the quantity of trees sold rises. Is this a violation of the law of demand? b. Explain what it means when the supply of television sets rises. Explain what it means when the quantity supplied of television sets rises. Explain how the price of television sets could rise, and yet the supply of television sets not change. c. Evaluate the following statement: “The demand for Ghana oranges has increased because the quantity of Ghana oranges demanded in Burkina Faso has risen.” Q2 a. (i). Draw a graph showing equilibrium in the money market. Carefully label all curves and axes and explain why the curves have the slopes they do. (ii). Using the graph you prepared in a(i), illustrate and explain what happens when the Central Bank decreases the money supply. (iii). When the Central Bank decreases the money supply, the equilibrium level of income changes. Illustrate and explain how. b. Ghana Commercial Bank has total deposits of GH¢2,000,000 and legal reserves of GH¢220,000. i. If the reserve requirement is 10 percent, what is the maximum loan that Ghana Commercial Bank can make, and what is the maximum increase in the money supply based on Ghana Commercial Bank’s reserve position? ii. If the reserve requirement is changed to 5 percent, how much can Ghana Commercial Bank lend, and how much can the money supply be expanded Q3 a. Write an equation that defines the real interest rate. Use the equation to explain why unexpectedly high inflation redistributes income from creditors to debtors. b. Suppose 550 people were surveyed, and of those 550, 450 were working full time. Of the 100 not working, 20 were full-time college students, 30 were retired, 10 were under 16 years of age, 15 had stopped looking for work because they believed there were no jobs for them, and 25 were actively looking for work. i. How many of the 550 surveyed are in the labour force? ii. What is the unemployment rate among the 550 surveyed people? c. Use a supply and demand diagram to illustrate the following conditions: i. Cost-push inflation caused by a labour union successfully negotiating for a higher wage ii. Demand-pull inflation caused by an increase in demand for domestic products from foreign
a. In December, the price of Christmas trees rises, and the quantity of trees sold rises. Is this a
violation of the
b. Explain what it means when the supply of television sets rises. Explain what it means when
the quantity supplied of television sets rises. Explain how the price of television sets could rise,
and yet the supply of television sets not change.
c. Evaluate the following statement: “The demand for Ghana oranges has increased because
the quantity of Ghana oranges demanded in Burkina Faso has risen.”
Q2
a. (i). Draw a graph showing equilibrium in the
axes and explain why the curves have the slopes they do.
(ii). Using the graph you prepared in a(i), illustrate and explain what happens when the Central
Bank decreases the money supply.
(iii). When the Central Bank decreases the money supply, the equilibrium level of income
changes. Illustrate and explain how.
b. Ghana Commercial Bank has total deposits of GH¢2,000,000 and legal reserves of
GH¢220,000.
i. If the reserve requirement is 10 percent, what is the maximum loan that Ghana Commercial
Bank can make, and what is the maximum increase in the money supply based on Ghana
Commercial Bank’s reserve position?
ii. If the reserve requirement is changed to 5 percent, how much can Ghana Commercial Bank
lend, and how much can the money supply be expanded
Q3
a. Write an equation that defines the real interest rate. Use the equation to explain why
unexpectedly high inflation redistributes income from creditors to debtors.
b. Suppose 550 people were surveyed, and of those 550, 450 were working full time. Of the
100 not working, 20 were full-time college students, 30 were retired, 10 were under 16 years
of age, 15 had stopped looking for work because they believed there were no jobs for them,
and 25 were actively looking for work.
i. How many of the 550 surveyed are in the labour force?
ii. What is the
c. Use a supply and demand diagram to illustrate the following conditions:
i. Cost-push inflation caused by a labour union successfully negotiating for a higher wage
ii. Demand-pull inflation caused by an increase in demand for domestic products from foreign
buyers
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