Faculty of Business Administration

Program: MBA,
Final Examination, Trimester: Spring 2020,

Posting: 19.06.2020 (Friday) ECO 502: Macro Economics (Section #: 1)

Submit by: 26.06.2020 (Friday)
Instructor: Prof. Dr. M. Ashraf Hossain, FBA, & Director of IQAC, EU
Marks: 30 (7.5 x 4)

Instructions & Information:

 Answer any 4 of the 5 questions & submit within 26.06.2020.
 Figures in the right margin indicate marks.
 Answer all parts of each question consecutively; and start each question from a fresh sheet.
 Please do computer compose (MS word) or may send handwritten answers by photocopying consecutively
 Please don’t share your answers in the group; and send it to my email: ahossain@easternuni.edu.bd
 Any answer fully similar may disqualify both; and please follow the provided exam guidelines carefully.

1. a). Define the labor force of a country. Explain with example the “Rule of 70”. 1+1.5

b). Distinguish the unemployment types. How do we calculate the natural rate of 3+1+1

unemployment (NRU)? How economists define “Full Employment”?

2. a). What are the sources of government revenue? Write the types of public expenditure. 1.5+1.5

b). Explain briefly the multiplier effect for economic stabilization. Suppose a $150 increase 2+2.5
in desired investment spending ultimately results in a $450 increase in real GDP. i).
What is the size of the multiplier? ii). If the MPS is 0.4, what is the multiplier? iii). If
investment spending increases by $50 billion in an economy whose MPC is 2/3, then
what would be the change in real GDP?

3. a). What are the key sources of economic growth and the Okun's Law indicates what? 3
Explain.
b). What do you mean by inflation and how to measure Inflation Rate? Explain Demand- 1.5+3
pull and Cost-push inflations.

4. a). What are the key assumptions of international trade? Explain the Diamond Theory. 1.5+3

b). Describe the “Comparative Cost Advantage” theory. 3

5. Answer any three (3) questions from the below: (2.5 marks x 7.5
3)
a). Define and visualize the “Business Cycle (BC)”, and briefly explain the phases of BC.
b). Who are the market participants in international trade? Briefly explain.
c). Why UN’s ECOSOC recognized Bangladesh as a Developing Country?
d). Explain, why trade among two countries will not possible in equal costs difference of goods?
e). Describe briefly the Product-cycle Theory in International Trade.
f). Draw a Laffer Curve and then explain.

Good Luck!