Part 1

Changes in macroeconomic indicators can often be of relevance to business and influence decision-making concerning a range of issues related to things like profit forecasts, expected sales growth, expansion plans, etc.

Assume you are employed as a business analyst with a large Singaporean based multinational corporation that manufactures electronic products. Identify and discuss how each of the following macroeconomic issues may be relevant to the firm:

a) Rising unemployment in Singapore and other developed nations.

b) Depreciation of the Singapore dollar relative to other major currencies.

c) A major export market where electronic goods are sold experiences accelerating inflation.

d) Intellectual property (IP) protections are abolished.

Part 2

Answer the following questions:

a) Identify key assumption underlying Keynesian and Classical approaches to marcoeeocnomic analysis.

b) What differences emerge between Keynesian and Classical economists regarding understanding about the business cycle and how the economy should best be managed?

c) Present an argument where you express support for either a Keynesian approach OR a Classical approach. You should make a case in arguing for only ONE of these two different approaches. To support your argument draw on real world examples and/or evidence that you cite in your answer and include in the reference list at the end of your assignment.

Part 3

Assume the following information for an economy:

Natural level of output = $128b

C = 13 + 0.6(Y)

Investment = 16

Government spending = 19

Autonomous taxation = 5

Marginal tax rate = 0.16

Exports = 34

Imports = 32

Marginal propensity to import = 0.08

Based on this information answer the following questions:

a) Calculate the output ratio for the economy.

b) Using the Phillips Curve illustrate the current approximate position for the economy and identify this as point A.

c) Assume the government increased spending by $2b. Calculate what the new equilibrium level of output will be.

d) As a result of c) indicate how this will likely impact the economy using the Phillips Curve model from b). Label the new position the economy will approximately be at as point B.

e) Discuss whether the government actions in c) are consistent with the objectives of economic stablisation. Include within your discussion reference to what the goals and objectives of economic stabilisation entail.