Macroeconomics questions.

Many people in the country have been complaining about high interest rates for bank loans. Explain why interest rates in Tanzania are higher than countries like Germany. Please do not forget to name and discuss briefly the possible culprits for the high interest rate in the country and  recommending measures which could be used to lower them.

Write short notes on the following terms

1. Recession
2. Recessionary gap
3. inflationary gap

Derive graphically the IS and LM curves.

Use the  IS-LM model to explain how changes in public (government) spending, a tax cut, and an increase in money supply influence output in a given economy.

Lowering the interest rate is among the most common macroeconomic policy measures which are used to avoid a recession

1. Explain how a low interest rate can simulate output growth
2. Describe briefly the undesirable effects that are likey to be associated with a low interest rate.

Describe briefly how changes in income , tax rate,government(public) spending and the marginal propensity to consume influence saving and hence investment in a closed economy.

Briefly discuss how the saving behavior in an economy can influence the effectiveness of an increase in public spending and/or a price cut in increasing output(GDP).

Explain why a reasonable increase in money supply is important in sustaining growth in the economy.

One of the primary objectives of the Bank of Your country is to achieve price stability. Explain why such a bank put so much importance in controlling inflation and suggest ways of curing/ controlling it.

Use the real business cycle theory to explain and illustrate graphically how an adverse shock is likely to influence the price level and output in a given economy.