Question: 11. Explain graphically to indicate the adjustment in the equilibrium for following cases - (a) A decrease in Government Purchases in the Keynesian Cross (b)

11. Explain graphically to indicate the adjustment in the equilibrium for following cases - (a) A decrease in Government Purchases in the Keynesian Cross (b) A reduction of tax rate by government (c) An increase in subsidy by the government 12. (a) If the marginal propensity to consume is 0.7. Calculate and interpret: (i) Tax multiplier and (ii) government purchases multiplier (b) How tax and government purchases multiplier changes when MPC reduces to 0.6 from 0.7. 13. (a) At present 1 USD is equivalent of 85 Taka. Use this information to discuss the concept of appreciation and depreciation? (b) Appreciation of Bangladeshi Taka will make import of products from USA cheaper - Is it a right statement? Logically explain. (c) 1 USD = 85 Taka. The price level in Bangladesh is 6% while in USD it is 3.2%. What is the real exchange of Taka in terms of dollar? 14. What does purchasing power parity means? 15. 1 BDT = 1.10 Rupee. The average medical cost for an open-heart surgery in Bangladesh is Tk. 3,00,000 taka whereas it is 2,20,000 Rupee in India. Additional cost of having a surgery in India for a Bangladeshi Citizen is Tk. 40,000 taka (including travel fare and accommodation etc.). Calculate the real exchange rate and suggest on average in which country the cost of open-heart surgery is cheaper? Also, based on your answer comment whether it's a rational economic choice to go for an open-heart surgery in India or not? If yes, what other factors may influence to go against such decision?

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