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jammaster01

Need some help/advice on these questions, which i dont understand.

q) determinants of consumer borrowing? (would one of them be rate of interest? what would others be? why?)

q) importance of consumer borrowing in achieveing a high level of national income in the UK? (aint got a clue - 15marks )

q) Economists often refer to the 'retail price index'. Explain the term 'index'. (how would i gain 8 marks for this???)

Any help appreciated...

q) Economists often refer to the 'retail price index'. Explain the term 'index'. (how would i gain 8 marks for this???)

First of all define it: measure of inflation taken at a base year (this definition might not be correct, I haven't exactly defined it for a while)

then define index: weighted average of prices for a given class of goods or services in a time period.

talk about the basket of goods for calculating the weighting

Reply 1381

jammaster01

thetopnotch

q) Economists often refer to the 'retail price index'. Explain the term 'index'. (how would i gain 8 marks for this???)

First of all define it: measure of inflation taken at a base year (this definition might not be correct, I haven't exactly defined it for a while)

then define index: weighted average of prices for a given class of goods or services in a time period.

talk about the basket of goods for calculating the weighting

Thanks mate :smile:

But i dont understand the last thing you said - and how would i integrate that into the question? :confused:

Reply 1382

thetopnotch

16

jammaster01

Thanks mate :smile:

But i dont understand the last thing you said - and how would i integrate that into the question? :confused:

http://en.wikipedia.org/wiki/Retail_Prices_Index_(United_Kingdom)

Read point 2 and 3

Reply 1383

M.A.H

17

Urgent help:

Consider the two-period problem of the representative consumer and assume the
consumer has current-period income y = 150, future income y' = 180, current and
future taxes t = 40 and t' = 48, respectively, and faces a market real interest rate of
r = 0:2 (or 20% per period). The consumers preferences over c and c' are represented
by the following utility function:
U(c, c') = min {c, c'}

a) Show the consumer’s lifetime budget constraint and indi¤erence curves in a
diagram.

How would i construct the indifference curve from this information? Can i just draw any indifference curve and then work out the point of tangency (optimal bundle)?

THANK YOU!

++REP!

Reply 1384

Ourkid

12

alex_hk90

Differentiate (partially) with respect to L. Then check if that function is decreasing with respect to L. Maybe you could just find the second derivative and check if that is negative. I'm not sure though as I'm very tired at the moment and can't really think clearly...

That makes sense, as the gradient is what shows MPL, so taking first n second deriv should be right.

For some reason I can't figure it out - i know it should be simple, but im having a mental block. In the example of 2K+15L, I take 1st deriv wrt L, and get 15. second deriv = 0... so does this just mean that 2k+15L is just a function with constant MPL? that must be right?? what!

Ourkid

EDIT also - root(KL) is K^1/2.L^1/2 and not K^1/4.L^1/4 right? my maths is a bit rusty atm. Cheers :biggrin:

Reply 1385

alex_hk90

19

Ourkid

That makes sense, as the gradient is what shows MPL, so taking first n second deriv should be right.

For some reason I can't figure it out - i know it should be simple, but im having a mental block. In the example of 2K+15L, I take 1st deriv wrt L, and get 15. second deriv = 0... so does this just mean that 2k+15L is just a function with constant MPL? that must be right?? what!

Yes, that sounds right to me. And if you think about what the function is saying, for every extra L the increase in output is 15, it's pretty obvious that it's constant returns to L.

Ourkid

EDIT also - root(KL) is K^1/2.L^1/2 and not K^1/4.L^1/4 right?

Yes:

\sqrt{KL} = \sqrt{K}\sqrt{L}

Reply 1386

pink_and_lilac_rainbows

Hi, my questions is how to derive equilibrium output from these relationships:
C=co+c1YD
YD=Y-T
I=Io
T=To
G=Go
S+T=I+G
Thank you

Reply 1387

alex_hk90

19

pink_and_lilac_rainbows

Hi, my questions is how to derive equilibrium output from these relationships:
C=co+c1YD
YD=Y-T
I=Io
T=To
G=Go
S+T=I+G
Thank you

Well, one equation will be:
Y = C + I + G
where you substitute in the expressions for C(YD), I and G.
But it doesn't look like there's enough information, unless you just want it in terms of S and T (might cancel out), in which case I guess the other equation is on the last line:
S + T = I + G
and then solve simultaneously (or perhaps just substitute in as the second equation doesn't have Y).

I'm more used to the IS-LM model and solving for Y and r so I can't guarantee that that's right, but hope it helps anyway. :smile:

Reply 1388

Babyblue89

Hi, could anyone help me with this question please,

Utilizing a model of your choice demonstrate the conditions required for an increase government expenditure to have little effect on output. Explain.

Thanks

Reply 1389

alex_hk90

19

Babyblue89

Hi, could anyone help me with this question please,

Utilizing a model of your choice demonstrate the conditions required for an increase government expenditure to have little effect on output. Explain.

Thanks

Maybe use the IS-LM model with a (near-)vertical LM curve?

Reply 1390

modea-modex

when aggregate demand exceeds what happens to the price level and to income?

Reply 1391

Jackline

Please help me define:

1.

Marginal abatement function

2.

Marginal damange function

3.

Ambiennt based system for permit allocation

Thank you

Reply 1392

Jackline

correction:It's marginal damage function,ambient based systtem for permit allocation

Reply 1393

jammaster01

explain how investment causes economics growth

Reply 1394

sundaram

In the table below, calculate the total revenue without price discrimination, as well as with price discrimination

P Qd
20 0
14 25
8 35
4 45

Reply 1395

jammaster01

explain how investment causes economics growth

Anyone able to help with the question?

Reply 1396

MeAndBubbles

12

jammaster01

Anyone able to help with the question?

Instead of consuming resources and satisfying immediate wants, you can put the resources together in firms. These are inputs in production functions that represent the technology of the firm. The firm produces output, which would not have existed if the resources had been consumed in the first place. However if there is no demand for the products of the firm, then the investment is wasted, but nobody is going to produce a good using inputs of less value then the output. So firms want to add value to make a profit, and then the investment process can be explained by wanting to make profit and wanting to have better lifestyles in the future, so people save which is invested by firms.

Reply 1397

maxell

Hello fellow economists!

I'm stuck. lol. I've been answering this 10-marker-essay question for the last 30 minutes and couldn't find sensible answers for it. The question is: "Evaluate the link between household debt and consumption". I brainstormed some of my ideas and this came out from my head:
a) Higher household debt means less consumption - fall in consumer spending.
b) An increase in income may result to households paying their debt which may lead to more consumption
c) Higher household taxes = more interest? ; rise in taxes = less spending (due to tax)

I can't think of any more link between the two. Take note I only did Aggregate Demand Curves, Economic Indicators i.e. Inflation, CPI, HDI and Income and Wealth. I couldn't ask anyone at my school coz im doing it via distance learning. I'll wait for your answers my fellow economists. Cheerio!

Reply 1398

maxell

Evaluate the link between household debt and consumption

Help please?

Reply 1399

c0nfus3d

okay, what are some of the specific careers you can go into with an economics degree and what is they pay like? is there like a further qualification entailed like with accountancy? the ACCA?

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