MACROECONOMICS & BUSINESS ENVIRONMENT 2

Course Code: SL EC 501 Date: 13/11/20

Full Marks: 25
Instructor: Swati Pathak
Total Marks 25
Time: 30 minutes.

Brief answers and neat and clean diagrams with proper labeling will be
awarded.

1. Construct AD schedule from the following information. Based on the

information draw AD curve. Explain each components of AD curve here.
(Marks will be assigned on labelling each components).
2+ 4+4 =10

C =200 + 0.8Y

I = 600 crores

G= 900 crores

And NX (net export) = 700 crores

2. In an era of recession with unintended unemployment, and lower

output and lower aggregate demand, Government wants to take some
measures to boost economy (aggregate demand). Suggest any policy to
improve economic situation. Explain your policy in Keynes AD-Y
equilibrium model and show how your policy change the equilibrium.

1+9=10

3. What is meant by multiplier. Explain tax multiplier and derive its value.
Is the value lower than investment multiplier? 1+3+2= 5