Questions:
3. (a) Distinguish between the following terms, using relevant examples in each case: Fixed Capital and Social Capital; Savings and Investment; Capital Widening and Capital Deepening. (b) State and explain FIVE factors affecting the level of investment in the Irish economy (c) State and explain Keynes's THREE motives for holding money. Explain, with the aid of a diagram(s), Keynes's theory on the relationship between the holding of money and the rate of interest. 4. (a) Explain what is meant by the term 'National Income'. In Ireland at present, would you expect GNP to be greater than, equal to, or less than, GDP? Explain your answer. (b) Explain what is meant by the term 'the multiplier' State the formula by which the multiplier is measured in an open economy. Explain the variable elements in the formula. It has been estimated that in the Irish economy: MPM = 0.4, MPT = 0.24, MPS = 0.26. Calculate the value of the multiplier in the Irish Economy. Show your workings. (c) Gross National Product at Current Market Prices for the year 2005 in Ireland was approximately 45% higher than the figure for the year 2000. State and explain the relevance of FOUR other pieces of economic information which you would use to assess whether or not the average standard of living had also risen by approximately 45% between 2000 and 2005.1. (a) For analytical purposes economists make certain assumptions about consumer behaviour State and explain FOUR principal assumptions. (b) A manufacturer of three different products calculates the price elasticity of demand for each product as follows: Product X: -1.5 Product Y: -1.0 Product Z: -0.3 The company wishes to maximise its revenues. Explain in respect of each of these products, what change, if any, the company should make in the prices currently being charged to enable it to achieve its aim. (c) A consumer buys 10 units of Good A when the price of Good B is 65. When the price of Good B rises to (6 (the price of Good A remaining unchanged) the consumer buys 14 units of Good A. Define cross elasticity of demand. Using an appropriate formula, calculate this consumer's cross elasticity of demand for Good A. Show your workings. Is Good A a substitute for, or a complement to, Good B? Explain your reasoning. 2. (a) State and explain THREE key features of an oligopolistic market. (b) With the aid of ONE clearly labelled diagram: Explain the shape of the 'kinked demand curve' under oligopoly. Explain the long run equilibrium position of a firm facing a 'kinked demand curve'. Explain what is meant by the term 'rigidity of prices' under a 'kinked demand curve" (c) Explain THREE types of collusion which may occur in an oligopolistic market. Do you believe that the Irish retail market for banking services (e.g. personal current accounts.) operates under oligopolistic conditions? Explain your
