Explain the importance of the balance of payments

Assignment Help Macroeconomics

Reference no: EM132890709

LO 1: Define the unemployment rate and the inflation rate and explain how to measure them

LO 2: Explain the criteria and evolution of money and its role in the economy

LO 3: Interpret the theories of business cycle and illustrate the differences between them

LO 4: Explain how international trade is financed to understand the mechanism of international borrowing and lending.

Question 1. A country has a population of 160 million. Out of this population, the number of retired people is 23 million, the number of people below working age (under 16 years) is 39 million, and the number of people under different types of institutional care is 1.5 million. In this country, the number of the employed amount to 75 million people and the unemployed amount to 4 million people. Calculate the following and show your work:

A. Working-age population

B. Unemployment rate

C. The economic activity rate

D. Employment rate

Question 2. Given the following table about the level of the consumer price index (CPI), perform calculations and show your work in the coming parts of the question.

Consumer Price Index

1. Calculate the inflation rate in 2016.

2. If the inflation rate was 6 percent in 2017, calculate the CPI in 2017.

3. If the nominal interest rate was 9 percent in 2019, use the above table to calculate the real interest rate in 2019.

4. What is the level of the consumer price index in the base year.

Question 3. The central bank in a country released the following statistics. Total deposits in banks amounted to $1,200 million, notes and coins outside banks reached $300 million and reserves of banks held at the central bank amounted to $60 million. Use these figures to calculate the following and show your work:

1. Calculate the quantity of money (the money supply)

2. Calculate the monetary base

3. Calculate currency drain ratio

4. Calculate the reserve ratio

5. Calculate the money multiplier

Question 4: Explain the Real Business Cycle (RBC)Theory. Explain also both the Impulse of this theory and its Mechanism.

Question 5. Answer the following questions.

1. Explain the importance of the Balance of Payments.

2. Suppose the exchange rate of the euro against the US dollar changed from 1.10 dollars per euro to 1.15 dollars per euro.

A. Calculate the change in the exchange rate of the euro against the US dollar. Did the euro appreciate or depreciate against the US dollar?

B. Calculate the change in the exchange rate of the US dollar against the euro. Did the US dollar appreciate or depreciate against the euro?

Question 6. The world witnessed the outbreak of the COVID 19 which adversely affected many aspects of life in the world. Explain the major effects COVID 19 had on the global economy in 2020 in terms of economic developments and indicators.

Attachment:- Macroeconomics.rar

Reference no: EM132890709

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