1. Assume that Thailand economy is in long-term equilibrium. a) Use the model of aggregate demand and aggregate supply to show the initial equilibrium (including both short-run and long-run aggregate supply). b) Thailand and America signed bilateral trade agreement, this increased net export of Thailand significantly. Use your diagram to show what happens to output and the price in compared with initial equilibrium in Thailand. c) Illustrate the new long-run equilibrium and explain. 2. Suppose that marginal propensity to consume is 0.6 in an economy. a) What is the multiplier? b) If the government increases expenditure by $100 billion and there is no crowding-out effect, what is total effect of an increase in government spending on aggregate demand? 3. The diagram shows the real equilibrium in an opened economy of the US. Suppose that the US government applies an investment incentive policy, how the equilibrium of this economy will be affected by this policy? Use the diagram to show this impact. [align=center] View attachment Untitled.png [/align] 4. Vietnamese economy begins in long-run equilibrium. a) Use the model of aggregate demand and aggregate supply to show the initial equilibrium (including both short-run and long-run aggregate supply). b) Suppose that the stock market crashes, reducing consumers’ wealth. Explain the short-run and long-run effects on output and the price level. c) Illustrate the short-run and new long-run equilibrium in the diagram.