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    Assignment Number: 1: Submitted by

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    Rashik Ahmed
    This document contains a student's assignment submission. It includes calculations of nominal GDP, real GDP, and GDP deflator for years 2016-2018. It also contains questions on what should be included in GDP calculations and explanations of expenditure approach, income approach, and value added approach using an example of pizza production. The assignment was submitted by Rashik Ahmed, student ID 2020-1-10-203, for the course ECO102, section 9 to the instructor Asiya Siddica at East West University.

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    Assignment Number: 1: Submitted by

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    Rashik Ahmed
    20 views4 pages
    This document contains a student's assignment submission. It includes calculations of nominal GDP, real GDP, and GDP deflator for years 2016-2018. It also contains questions on what should be included in GDP calculations and explanations of expenditure approach, income approach, and value added approach using an example of pizza production. The assignment was submitted by Rashik Ahmed, student ID 2020-1-10-203, for the course ECO102, section 9 to the instructor Asiya Siddica at East West University.

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    Principles of Macroeconomics assignments

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    ECO102(9)_RashikAhmed_2020-1-10-203_A1

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    This document contains a student's assignment submission. It includes calculations of nominal GDP, real GDP, and GDP deflator for years 2016-2018. It also contains questions on what should be included in GDP calculations and explanations of expenditure approach, income approach, and value added approach using an example of pizza production. The assignment was submitted by Rashik Ahmed, student ID 2020-1-10-203, for the course ECO102, section 9 to the instructor Asiya Siddica at East West University.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    20 views4 pages

    Assignment Number: 1: Submitted by

    Uploaded by

    Rashik Ahmed
    This document contains a student's assignment submission. It includes calculations of nominal GDP, real GDP, and GDP deflator for years 2016-2018. It also contains questions on what should be included in GDP calculations and explanations of expenditure approach, income approach, and value added approach using an example of pizza production. The assignment was submitted by Rashik Ahmed, student ID 2020-1-10-203, for the course ECO102, section 9 to the instructor Asiya Siddica at East West University.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    Assignment Number: 1

    Submitted By

    Name: Rashik Ahmed

    ID: 2020-1-10-203

    Course: ECO102

    Section: 9

    Submitted To
    Asiya Siddica

    Senior Lecturer, Department of Economics

    Faculty of Business and Economics, East West University

    Semester: Fall 2020

    Date of Submission: 31st October, 2020.


    1.

    A)

    Calculating Nominal GDP,

    Year Calculation
    2016 ($900 per computer X 10) + ($10 per DVD X 100) + ($15 per Pizza X 2) = $10030
    2017 ($1000 per computer X 10.5) + ($12 per DVD X 105) + ($16 per Pizza X 2) = $11792
    2018 ($1050 per computer X 12) + ($14 per DVD X 110) + ($17 per Pizza X 3) = $14191

    B)

    Calculating Real GDP,

    Year Calculation
    2016 ($900 per computer X 10) + ($10 per DVD X 100) + ($15 per Pizza X 2) = $10030
    2017 ($900 per computer X 10.5) + ($10 per DVD X 105) + ($15 per Pizza X 2) = $10530
    2018 ($900 per computer X 12) + ($10 per DVD X 110) + ($15 per Pizza X 3) = $11945

    C)

    Calculating GDP Deflator,

    Year Calculation

    2016 ($10030/$10030) X 100 = 100

    2017 ($11792/$10530) X 100 = 117

    2018 ($11945/$10530) X 100 = 119

    2.

    A) This will not be included in the GDP because we know that shares of stock are a non-market activity,
    thus, it doesn’t influence the market.

    B) This will not be included in the GDP because a plant will produce more goods and services, so the plant is
    an intermediate service.

    C) This is will be included in the GDP because it is a finished good/product.

    D) This will not be included in the GDP because used copy of a textbook is a used good.

    E) This will not be included in the GDP because Social Security Benefits is a transfer payment which is made
    by the government.
    F) This will be included in the GDP because the mozzarella cheese is a raw material which is in the inventory
    but not yet used to produce the intermediate good or final good.

    G) This will not be included in the GDP because illegal goods are not reported to the economy, hence, they
    are not counted.

    3.

    A)

    The cost of basket for 2017 = (50*3+70*2+4*80) = 610

    The cost of basket for 2018 = (55*3+72*2+90*4) = 669

    The cost of basket for 2019 = (57*3+74*2+100*4) = 719

    B)

    The CPI for 2017 = (610/610) *100 = 100

    The CPI for 2018 = (669/610) *100 = 109

    The CPI for 2019 = (719/610) *100 = 117

    C)

    Calculating Inflation rate,

    For 2018, Inflation rate = (109-100)/100 = 0.09

    For 2019, Inflation rate = (117-109)/109 = 0.073

    4.

    We know that,

    Expenditure approach = Consumption + Investment + Government Expenditure + Net Export


    = 5000+1000+1000+500-700
    = 6800

    Income Approach = Wages + Rent + Interest + Profit


    = 5300+600+900
    = 6800

    Here, we can see that the expenditure approach and the income approach add up the same figure.
    5.

    A) Here, intermediate goods are breads and cheese. And final good is pizza.

    Therefore, Value added approach for bread = (Final good – Intermediate good) = 50-0 = 50

    Value added approach for Cheese = (Final good – Intermediate good) = 35-0 = 35

    Value added approach for Pizza = (Final good – Intermediate good) = 200-50-35 = 115

    Total value added = (50 + 35 + 115) = 200

    B)

    We know,

    Expenditure Approach = Consumption + Investment + Govt. Expenditure + Net Export

    = C + I + G + (X – M)

    Here, C = Pizza price = 200


    I=0
    G=0
    (X – M) = 0

    Therefore, Expenditure Approach = 200+0+0+0 = 200

    C)

    Calculating income approach,

    Aggregate Income
    Bread Cheese Pizza
    Value of Output 50 35 200
    Cost of Input 0 0 50+35
    Wage 15 20 75 Total wage = 110
    Profit 50-15 = 35 35-20 = 15 200-85-75 = 40 Total Profit = 90
    Rent 0 0 0 Total Rent = 0
    Interest 0 0 0 Total Interest = 0
    110+90+0+0 = 200

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