1) Changes in spending on public infrastructure

AD-AS model: increase in spending on public expenditure→ increase in

government expenditure → a raise in AD represented
Circular flow of income model: increase in spending on public
expenditure → increase in government expenditure→ increase in
injections —> injections>withdrawals → an unplanned drawdown in
firms’ inventories → firms increase their production levels and will hire
more factors of production → firms will pay out more wages, rent,
interest and profits → national income will rise → level of savings, taxes,
and imports will increase → an increase in withdrawals → withdrawals
will rise until a new equilibrium level of national income is achieved
(when J=W)
Changes in subsidies to needy households
AD-AS Model: increase equity → increase in subsidies to needy
households → raise in government expenditure by investing in subsidies
→ raise in AD
Circular flow of income model: increase in subsidies to needy
households → increase in withdrawals due to decrease in spendings on
public transport which leads to increase in savings → withdrawals
exceed injections → fall in level of expenditure → unplanned increase
in firms’ inventories → firms will reduce their production levels and hire
fewer factors of production → firms will pay out less in wages, rent,
interest and profits → national income will fall → level of savings, taxes
and imports also falls → fall in withdrawals → withdrawals will continue
to fall until new equilibrium level of national income is achieved (J=W)
2) Lol
3) China has the lowest private consumption followed by Singapore
then the US. This means that China has the Marginal Propensity to
Consume (MPC) is the highest followed by Singapore and the US.
The US has the highest tax rate followed by China and Singapore.
Singapore has the highest export of goods followed by China and
 the US. From these comparisons, we can see that CHina has the
smallest multiplier followed by Singapore and the US
4) ai) Unemployment
aii) The GDP growth rate and inflation rate are two indicators that
might be of concern to the Japanese economy. The inflation rate
of Japan is -0.3 annual % change in CPI, meaning that it is a
deflation rate referencing the general price levels. Although
deflation would mean that there would be lower prices, deflation
can cause high unemployment rates, leading to a recession and
eventually, if not corrected, a depression. Due to deflation, firms
would have lower total revenue and would have to cut on their
costs to sustain in the long-run. As such, workers would be given a
lower wage, leading to lower savings and spendings. The GDP
growth is -0.6 annual %, meaning that it is a negative value of
GDP and is due to the decline in real national income. This could
be due to higher unemployment, lower levels of production, and
a decline in the real value of wages. As such, it is an indication
that the economy is on a decline.

5) Australia has a higher ranking than Singapore in terms of the HDI

index. Since Australia has a higher ranking than Singapore in this
measure, we can see that Australia has higher living standards
than Singapore in non-material aspects. Additionally, its
distribution of income is better than that of Singapore as seen
from the HDI ranking.

The GDP per capita for Singapore is, however, greater than that
of Australia, showing that there is a higher economic growth rate
in Singapore than that in Australia. Due to the greater economic
growth, there would be a greater standard of living in Singapore
than in Australia In material aspects. In terms of distribution of
income, an increase in national income would not mean that all
 individuals benefit equally from it as such does not reflect the
distribution of income accurately.

In terms of Gini coefficient, Australia has a smaller coefficient than

Singapore, meaning that it has a greater degree of income
equality than Singapore and thus better income distribution. As
such, with better income distribution, there will be a greater
standard of living.

6) Long Run:
Increase in export expenditure → rise in AD, ceteris paribus →
rightward shift of AD from AD1 to AD2.

Decrease in investment → decrease in interest rates → rise in AD

→ rightward shift of AD from AD1 to AD2, ceteris paribus.

Short Run: AD will rise