1. Draw the 3 X 3 (3 agents and 3 markets) circular flow of the economy and explain the interactions

between and among these?

2. What is Marginal Propensity to Consume (MPC)? If MPC is 0.7, what is the interpretation of that?

Calculate the MPS?

3. What is disposable income? How raise in tax rate by government is likely to affect consumption

function?

4. Derive Investment (I) = Savings (NS) from the standard GDP identity for a closed economy?

5. Consider an economy, Y=I+G+C where; Y=5000; G=1000; T=1000; C=200+0.70 (Y-T) and

I=1000-15r (all the figures are in taka)

(a) Calculate the value of consumption demand?

(b) Find out the private, public and national savings?

(c) Find out the market interest rate?

(d) If G reduces to 800 taka, what will be new market interest rate?

6. Explain graphically:

(a) The COVID 19 has caused to a decrease in investment

(b) An amendment of law enabled Ride Sharing companies to operate business in Bangladesh.

(c) To stimulate domestic economy government decided to take expansionary fiscal policy in

terms of government spending

(d) To increase consumer demand government has decided to reduce the tax rate

7. Write down the fisher equation? Explain that. If inflation is 3% and nominal interest rate is 6%

what is the real interest rate?

8. Write down the quantity theory of money equation? Explain core concept while mentioning the

main assumptions behind this theory?

9. Explain the following concepts (Please read these concepts from books and explain in your words

by using examples)

(a) Functions of money?

(b) What is Seigniorage?

(c) What is monetary inflation?

(d) Distinguish between cost push and demand-pull inflation?

(e) What is hyperinflation and what are the consequences of hyperinflation?

(f) Difference between broad and narrow money?

(g) Double coincidence of wants?

10. What instruments the Central Bank uses to control Money Supply? Explain in details?