SEMESTER SPRING 2021

MACROECONOMICS (ECO403)
ASSIGNMENT

DUE DATE:, 2ND AUGUST,2021

MARKS: 10

The Case:
Thailand is a country of Southeast Asia. Thailand is a multi- ethnic nation
with a population of 64.1 million approximately. The three main economic
sectors of Thailand are agriculture sector, manufacturing sector and
service sector. Main products of the country are garments, textile and
plastics while major exports are rice, rubber and gold. Major exports
partner are China, USA, Japan, Malaysia, Singapore, India and Hong Kong.
Economic growth rate is very good just because Thailand is export
oriented economy. Hypothetical facts and figures related to the economy of
Thailand have been given below:

Requirement # 1:
Suppose Consumption function of the economy of Thailand is;
C = 1000 + 0.9 (Y – T)
Marginal propensity to consume = MPC = 0.9
Consumption = C = Rs.5050
Taxes = T= Rs. 500
Income = Y =?

Calculate income (Y) when consumption is equal to Rs. 5050 while Taxes
(T) are Rs. 500.

(Marking scheme: 04)

Requirement # 2:
Following figure shows the equilibrium in IS-LM model in the economy of
Thailand. What will be the impact of increase in tax on the given diagram?
Explain graphically.
 (Marking scheme: 02)

Requirement # 3:
Economists wanted to improve the living standard of the people of
Thailand. They decided to increase the government expenditure. Suppose
marginal propensity to consume (MPC) of Thailand is 0.9. Calculate:
1. Government purchases multiplier
2. Tax multiplier
IMPORTANT:
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to avoid any inconvenience.
IMPORTANT INSTRUCTIONS
DEADLINE:
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Note related to load shedding: Please be proactive

Dear students!
As you know that semester activities have started and load
shedding problem is also prevailing in our country. Keeping in
view the fact, you all are advised to post your activities as early as
possible without waiting for the due date. For your convenience;
activity schedule has already been uploaded on VULMS for the
current semester, therefore no excuse will be entertained after due
date of assignments, quizzes or GDBs.