Section A Answer this question. Thai Economy's Prospects Improve Table 1.1: Total expenditure in Thailand, by category, 2014 | Category of Spending | US dollars (billions) | % National Expenditure | |----------------------|-----------------------|------------------------| | Household consumption | 243 | 55.6 | | Capital goods | 98 | 22.4 | | Government consumption| 69 | 15.8 | | Exports | 280 | 64.1 | | Imports | 253 | 57.9 | Source: United Nations data Extract 1: Thailand's economy shows improved health The latest figures show that Thailand's economy grew by 3.5% in the second quarter, putting it on track for 3–3.5% growth for the whole of 2016. Thailand has managed to boost its growth after several quarters of disappointing performance by increasing public sector investment in several large infrastructure projects, including roads, railways and airports. These projects will run over the next 3 to 5 years and are worth several hundred billion baht, Thailand's currency. It is hoped that this public sector investment will encourage the private sector to increase their investment spending. In addition to increased investment, the Thai economy's growth is being boosted by recovering private consumption due to increases in farm prices, which are crucial to household purchasing power, as well as a strong tourism sector. Regarding the export sector, which remains the biggest engine of growth, the outlook is still uncertain but the negative impact from China's economic slowdown appears to have stabilised with a Chinese growth rate of around 6.6% per annum. Source: The Nation, 18 August 2016 Extract 2: Thailand's tourism industry continues to grow The Thai tourism industry is projected to record international visitor arrivals of 16.67 million between January and June 2016, which will be up by 13% over the same period of 2015. Projected earnings are estimated at 824 billion baht, up 17%. The top three markets in terms of tourism receipts are projected to be China (146 billion baht, +32%), Malaysia (22.5 billion baht, +15%) and Australia (17.8 billion baht, +4%). China is now by far the largest source of visitors, but there has been a resumption of growth from Russia and Thailand's neighbouring countries of Cambodia, Laos and Myanmar. Source: Thailand Business News, June 2016

1. (a)(i)Calculate the level of aggregate demand in Thailand in 2014.[1]
2. (a)(ii)In which category of expenditure would the various infrastructure projects be placed?[1]
3. (b)(i)Explain how a fall in the rate of interest would be likely to affect expenditure on (i) consumption,[3]
4. (b)(ii)Explain how a fall in the rate of interest would be likely to affect expenditure on (ii) exports.[3]
5. (c)Explain how changes in any three demand factors might account for the greater rate of growth in numbers of visitors into Thailand from China than from other countries.[6]
6. (d)Discuss whether Thailand's government should be concerned that export and import spending represents the highest proportion of total spending in Thailand.[6]