The latest figures show that Thailand’s economy grew by 3.5% inthe second quarter, putting it on track for 3–3.5% growth for thewhole of 2016. Thailand has managed to boost its growth afterseveral quarters of disappointing performance by increasing publicsector investment in several large infrastructure projects,including roads, railways and airports. These projects will runover the next 3 to 5 years and are worth several hundred billionbaht, Thailand’s currency. It is hoped that this public sectorinvestment will encourage the private sector to increase theirinvestment spending.

In addition to increased investment, the Thai economy’s growthis being boosted by recovering private consumption due to increasesin farm prices, which are crucial to household purchasing power, aswell as a strong tourism sector.

Regarding the export sector, which remains the biggest engine ofgrowth, the outlook is still uncertain but the negative impact fromChina’s economic slowdown appears to have stabilized with a Chinesegrowth rate of around 6.6% per annum.

Refer to the source material before answering the question

1. Calculate the level of aggregate demand in Thailand in 2014.[1]
2. In which category of expenditure would the variousinfrastructure projects be placed? [1]
3. Explain how a fall in the rate of interest would be likely toaffect expenditure on
   1. consumption [2]
   2. exports. [2]

Table 1.1: Total expenditure In Thalland, by category, 2014 Category of Spending US dollars (bllllons) 243 % National Expenditure 55.6 22.4 Household consumption Capital goods Government consumption Exports Imports 98 69 15.8 280 64.1 253 57.9 Source: United Nations data