Department of Economics and Social Sciences
BRAC University
Name: Section:
USIS ID: G-suite ID:
ECO102: Introduction to Macroeconomics
Assignment 1, Spring 2021
This assignment is being released at 10:00 AM, 3 April 2021. You have exactly 24-hours to submit
your answers, i.e., you must complete the submission process before 10:00 AM, 4 April 2021.
Instructions about how to complete and submit this assignment are given below. There are seven
instructions. Please read them carefully before you start answering.
1. Write down your name, section, USIS ID, and G-Suite ID on the space provided above.
2. In the next page, you will find a consent form regarding ethical conduct while working on this
assignment. Please read the clause carefully and enter your digital signature before looking at
the questions.
3. This assignment has two questions. Please answer both the questions. Number your questions
properly. When you draw a diagram, use a pencil and a ruler. Label the diagram properly.
4. Since answering the questions will require drawing diagrams, you may not be able to answer all
questions in MS Word, or any other word processing software. It may be easier to use A4 papers
to answer the questions, scan it (you might want to use camscanner), convert it to PDF, and
then attach it with this document before submission.1 Make sure that the quality of your scan is
good and the text is legible. Make sure that the pages are ordered correctly.
5. Name the PDF document in this format: “sec_yourname_spring21_ECO102_assignment1”. For
example: section1_AdamSmith_spring21_ECO102_assignment1.
6. Email the document to your section instructor before deadline (see above). The email subject
line should be the same as your document title. Email addresses of ECO102 course instructors
are given below:
Section 1 and 2 Section 3 and 4 Section 5 and 6
Ahsan Senan (ASE) Rubana Ahmed (RUA) Rafiu Ibrahim (RFU)
[Link]@[Link] rubana@[Link] [Link]@[Link]
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If this instruction is not clear to you, please contact your section instructor immediately and ask for further
clarification.
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Department of Economics and Social Sciences
BRAC University
7. You must submit only one document. Please do not email the scans of individual pages to your
instructor. Collate all the pages together and then submit.
Ethical participation in this Assignment
Education enriches your mind, heart and soul! Your desire to learn and your enthusiasm are
admirable. The need for your ethical participation as you work on this assignment is of the utmost
importance. Kindly sign on the line below to acknowledge you will not cheat, use unfair means, join
intentionally or unintentionally any online or offline group in which exam answers are posted or
discussed, or engage in any behavior that would commonly be deemed to be academically
unethical.
Digital Signature, date
Question 1
On the basis of the recommendations of an 11-member committee, a decision was taken to offer
tax benefit to the active pharmaceutical ingredients (API) and laboratory-reagents manufacturers.
The policy offers the API and laboratory-reagents manufacturers in the country corporate tax
holiday facility until 2032. This includes exemption from paying advance income tax (AIT), value-
added tax, and VAT deduction at source on the purchase and sales of raw materials and spare parts
until 2032. The manufacturers will also get duty-free facility for import and priority for land
allocation in the government's special economic zones and export processing zones.
API are the main raw materials used in the production of most drugs and policies such as this will
increase the profitably of investment in current and future periods.
Based on the information above, answer the following questions [draw relevant diagrams to
support your answer]:
a. How is the industrial investment affected in industries that receive tax credit incentives?
b. What type of output gap do you think might be created due to these types of investment?
c. How will this change the Real GDP and employment situation of the country?
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Department of Economics and Social Sciences
BRAC University
Question 2
According to an ILO quarterly update on the global labor market, workplace closures and job losses
due to the COVID-19 pandemic in 2020 has led to a loss of 8.8 percent of global working-hours,
which is equivalent to the loss of 255 million full-time jobs.2
a. Explain the effects of this loss in labor-hour on the global output/GDP in 2020, with the aid of a
potential GDP and labor market diagram.
The same update goes on to say that the global labor income in 2020 declined by 8.3 percent,
equivalent to US$3.7 trillion.
b. Can you explain why the loss in labor income (8.3 percent) was lower than the loss in labor
working-hours (8.8 percent)? Use diagrams to support your argument. (Hint: think of labor
productivity)
Improvements in total factor productivity (TFP) - if it helps, think of TFP this as technological
advancement - are also expected to suffer because of the pandemic. According to a NBER working
paper, COVID-19 has lowered the TFP in the UK private sector by up to 5 percent. 3
c. Describe the effect of this fall in TFP on the UK output/GDP with the help of a diagram.
[Leave blank; begin answering from the next page.]
Please include your name, student ID, and section number on all pages and number the pages in
sequence.
Good Luck!
2
ILO-Monitor: COVID-19 and World of Work, seventh edition (25 January 2021):
[Link] [as
accessed on 25 March 2021]
3
Bloom, et al, (2020). The Impact of COVID-19 on Productivity. NBER Working Paper Series, no.28233. Retrieved from:
[Link] [as accessed on 25 March 2021]
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