Final Assignment

ECN202
Faculty: Shamil Al-Islam
Name: Sharar Shitab
ID: 1731560
Date: 26/08/2021

Answering to the question number 1

As per the given information, formula, Cost incurred for holding shares = cost of shares +
inflation % X Cost of Shares

According to the question

Estimated Purchase
price of shares = Tk, 10,000
Selling price of the shares = Tk 20,000

Assuming inflation rate = 100%

Rate of tax changes for capital gain = 10%

Therefore, cost incurred for holding shares = Tk 10,000 + [(100/100)*10000]

= Tk 20,000

Capital gain of shares = estimated selling price of shares - estimated purchase price of shares
= Tk 20, 000 - 10, 000
= Tk 10, 000

Tax on Capital Gain = (Tax Percentage/100)*Cost

= (10/1000)*10,000
= Tk 1,000
Aggregate money realized after tax adjustment = selling price - Capital gain on tax
= Tk 10, 000 - Tk 20, 000
= Tk 1000 (Deficit)

Answering to question number 2

Let’s assume the value of money multiplier is measured in (k)

(k) = 100/10
= 10
Hence, the supply of money is determined by the reserve given reserve ratio
= k*$1000
Putting the value of k in the equation, k=10,
=10*1000
= $10,000

Therefore the flow of money will elevate to $10000 from $1000

Current level of price= (10000*3)/100
= 300

As a result of the fall in the value of the reserve ratio the effect of the aggregate money in the
circulation will be reserved. This is because the worth for real output and velocity remains
constant. As a result there will be an influx of price level which will result in a an increase in
inflation on the economy.

Answer to Question number 3

As per given facts,

Real output (y) = 3000
Consumption ( C )= 1000
Government exp. ( G ) = 1000
Export (E) = 1000
Investment (I) = 1000
Lets consider imports and capital outflow as (N)

=> y= C+G+I+(E-x)
=> 3000 = 1000+1000+1000+ (1000-x)
=> x = 1000

So, we can see that there is a rise in the consumption by so which means that the latest
adjusted C is 1000 + 500 =1500

Therefore,
3000= 1500+1000+1000+1000-M
M= 4000-3000
= 1000
Here we can see the vice versa effect in the two variables which are consumption and capital
outflow respectively which means consumption level increases and so the capital outflow will
also increase.