1. A) Consider a closed economy with two classes of consumers: industrial workers and agricultural workers. The former pay tax while the latter don't. The former live in cities and spend more. Therefore, their marginal propensity to consume is greater than the same of the latter. Industry generates proportion of the GDP where . Calculate the equilibrium GDP of this Keynesian demand driven economy with autonomous investment and government expenditure. Show that the Balanced Budget Multiplier is less than 1. Explain why? (10 marks) 1. b) Now relax the assumption on autonomous investment. Introduce the investment function , where is the real interest rate. Derive the IS curve. If the LM curve in this economy is then derive the equilibrium output. Derive the multiplier effect and explain. Would there be a crowding out? (10 marks) 2. During the period between the petroleum discovery and its extraction, the current account of a country moved sharply into deficit. Can you link these two events using macroeconomic theory? (20 marks) 3. What are the macroeconomic effects of covid-19 pandemic? Are they more pronounced in Western countries? Discuss. Your answer should make use of models studied in the module. (20 marks) 4. A commercial bank decides to borrow some precious metals from the central bank at the prevailing lease rate. It then immediately sells the precious metals and invests the proceeds in long term treasuries. (40 marks) a) Under what condition, this trade is profitable? b) What are the benefits and underlying risks of this trade? c) If the country in question experiences a positive demand shock, would this trade be profitable? Explain your