1. According to the Bangladesh Bureau of Statistics (BBS), the unemployment rate in Bangladesh is4.20% of which 46% are university graduates. The rate of unemployment among people with tertiary level education has considerably risen. On the other hand, many foreigners mainly from India and Sri Lanka are working in various industrial sectors. This is happening because our local labour force lacks the required technical and managerial skills much-needed in this era of Industrial Revolution. Thus, for Bangladesh to attain sustainable economic growth through the rise of potential GDP, it is imperative to improve productivity of the workforce.

1. Describe the forces that might help the potential GDP of Bangladesh to grow using the concepts of Aggregate labour market. Illustrate your answer with an appropriately labelled diagram.
2. Such improvement in productivity and economic growth is followed by higher income andconsumption. How do you think this will affect the price level and the real GDP of the economy?Depict your answer with an appropriate AS-AD diagram.

2. The government of Bangladesh heavily relied on the monetary policy measures to mitigate the effects of the pandemic particularly by cutting down the interest rates. This would have a significant effect on the overall performance of the economy, analysts and policymakers believe.

1. How do you think a cut in the interest rates will affect the real GDP and the price level of the economy in the near future? Draw an appropriate diagram to support your answer.
2. Provided your answer and diagram in the previous part (a), mention the output gap the economy will be in AND how will the economy return to its full employment level? Draw an appropriate diagram to support your answer.
3. Changes in the interest rates have a direct impact on the loanable funds market of the economy. Explain what do you think will happen in the loanable funds market ?