Answer TWO out of THREE questions from this section 1. The following questions relate to Macroeconomic theory: a. A government of Lalalend is planning to invest in a machine that is going to considerably reduce pollution. The machine is expected to have a useful life of fiv years, after which the machine can be sold as scrap for an estimated $5000. The government plans to issue bonds to pay for the machine and intends to treat the i rate on the bonds as the relevant discount rate for evaluating the project. The mac will cost the E175,000, all of which must be paid at the beginning of the project. T machine will reduce costs of production in the economy by $50,000 per year, for year of the machine's life. The estimated supply and demand for loanable funds given by these equations: MD = 25,000,000 - 125,000,000r Ms = 2,500,000 + 62,500,000r Given the information above, should the firm undertake the investment in the m Support your answer using numbers. [25%] b. John has recently undertaken an investment project. In September 2017, he borr 150,000, and then he borrowed another $65,000 in September 2018. His loan has annual interest rate of 4.25% compounded monthly. What is the future value of at the end of September 2019? What is it going to be in March 2020? [25%] c. Suppose GDP is f28 trillion, consumption is f17 trillion, taxation is E2.7 trillion public saving is f1.2 trillion. Assuming this economy is open, calculate private government spending, investment, and net export. Comment on this economy balance. [20%] d. Critically discuss determinants of productivity in the context of developed vs developing countries. Explain also what can, a government policy, do to raise productivity and living standards. [30%]