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Question

i) The following headlines had been collected from the newspaper articles regarding 2019-20 (first three quarters):

a) The current income and the expected future income of Indian households are increasing due to continued increase in employment rate in 2019-20 compared to

2018-19.

b) The rate of profitability in the economy from Large and Mid-cap companies have increased to 7.5% from 2.3% in the year before (2018-19). The expected profitability

of most of the projects have made turnaround in the last three quarters of 2019-20 and banks have cut their lending rates. The analyst is hopeful this trend would

continue in the medium term.

c) The global demand has been surging in the last three quarters and the trend may continue.


Use the Keynesian cross framework to show the changes in Planned Expenditure in reaction to each of these news and explain whether and how they result in higher output

or lower output (GDP). Please explain using graphs and economic logic.

ii) The labour force participation rate in 2019-20 in the economy is 52%. Out of the total population of 1 million people in the country 50% are in the working age group. If the unemployment rate is 5%

in this economy,calculate the

a) The total number of people in the labour force.

b) the total number of people employed.

Step-by-step answer

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Subject: Business, Economics

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