Answer the following questions:

'Buy One Get One Free'

Define substitution effect and income effect of a price change and explain these with suitable graphical presentations.

What is money multiplier? Why is there a precautionary demand for money? explain the costs of being illiquid and liquid.

What does the Heckscher theory postulate? Which force do Heckscher and Ohlin identify as the basic determinant of comparative advantage and trade? Explain.

What is the difference between an nominal tariff and an effective tariff? Explain the usefulness of the concept of effective protection? How is the rate of effective protection measured?

What do you mean by import substitution and export-oriented policies? List the merits and demerits of each as a method of industrialization for a developing nation like Bangladesh.