Department Of Business Management Macroeconomics Assignment 1. Assume the economy that produce and consume meet and automobile in the following table are data for two different years Goods Year 2012 Year 2022 Quantity Price (in USD) Quantity Price (in USD) Automobile 1000 80,000 120 60,000 Meat 600,000 100 500,000 20 Based on the above information answer the next A and B questions A. Using the year 2012 as the base year, compute the following statistics for each year: Nominal GDP, real GDP, the implicit price deflector of GDP B. How much have the prices rises between 2012 and 2022 2. Suppose 1000 people were surveyed in Bale robe town and of those 1000,900 were working full time. Of the100 not working, 20 were full time college students 40 were retired ,10 under 15 years,10 had stopped looking for work because they believe that there were no jobs for them, and 20 were actively looking for work. The answer the following questions. A. how many of the 1000 surveyed are in the labor force? B. what is the unemployment rate among the 1000 surveyed people? 3. Suppose that the ministry of job creation and improving labor skill bank of Ethiopia has heard as you have just complete macroeconomics module in rift valley university bale robe campus. He/she calls you into ask what factor cause structural and cyclical unemployment in our country Ethiopia is all about. What is current status of unemployment rate in Ethiopia? Please outline each source by taking typical examples. Outline policy context for governments how they reduce structural and cyclical unemployment? Assume that you are policymaker and advisor regarding to unemployment? 4. Why does the Government Issue bonds and borrow money from other source instead of printing money? Is printing money the same as issuing bonds? How does printing of money influence an economy? Please explain each question briefly? Is printing money the same as issuing bonds? Same as Energy Numbers pointed, the difference is that in buying the bond, the central bank now owns a bond, but when the central bank printed the money, they just printed and inject the money to the economy. How does printing of money influence an economy? The consequences are clear: printing money drastically raises prices and lowers people's purchasing power and savings. Even today, with gas prices and everyday items at extreme highs, printing money and dispersing it into the pockets of consumers would raise the supply of money yet also raise the prices Why do governments borrow money instead of printing it? So government debt doesn't create inflation in itself. If they printed money, then they'd be devaluing the money of everyone who had saved or invested, whereas if they borrow money and use taxes to repay it, the burden falls more evenly across the economy and doesn't disproportionately penalize certain sets of people. 5. What is the basic difference between fiscal and monetary policy? Which policy is monopolized by government and national bank? Which policy is important to control current inflation problems in Ethiopia? Monetary policy refers to the actions of central banks to achieve macroeconomic policy objectives such as price stability, full employment, and stable economic growth. Fiscal policy refers to the tax and spending policies of the federal government. Monetary Policy Fiscal Policy Focus Area Stability of an economy Growth of an economy Impact on Exchange rates Exchange rates improve when there is higher interest rates Monetary Policy It has no impact on the exchange rates Fiscal Policy Definition It is a financial tool that is used by the central banks in regulating the flow of money and the interest rates in an economy It is a financial tool that is used by the central government in managing tax revenues and policies related to expenditure for the benefit of the economy Managed By Central Bank of an economy Ministry of Finance of an economy Measures It measures the interest rates applicable for lending money in the economy It measures the capital expenditure and taxes of an economy Focus Area Stability of an economy Growth of an economy Impact on Exchange rates Exchange rates improve when there is higher interest rates It has no impact on the exchange rates Targets Monetary policy targets inflation in an economy Fiscal policy does not have any specific target Impact Monetary policy has an impact on the borrowing in an economy Fiscal policy has an impact on the budget deficit
