Nominal & Real GDP Analysis môn Principles of Management | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

TRẦN QUỲNH HƯƠNG-FAFBIU23047-GROUP11
MACROECONOMICS- ASSIGNMENT 1 Question 1:
a. What is the value of nominal GDP?
As all the values are at curent prices:
Nominal GDP = Consumption + Investment + Government Purchases+ Net Exports = $650+$100+0=$750 Thus, the nominal GDP is 750
b. To achieve the economic growth rate at 7%, what is the value of real GDP
country A must possess in 2024? Real GDP2024=750*(1+7%)=802.5
Thus, to achieve the economic growth rate at 7%, the value of real GDP
country A must possess in 2024 is 802.5
c. How does the answer in (b) change if we know the GDP deflator of 2024 is 3%? GDP Deflator2024=100+3=103
Real GDP2024=750/(103/100)=728.155 Question 2:
a. Fill in all the blanks Base year 2022
GDP deflator2021=(1,000/1,100)*100=90.91
Real GDP2022= Nominal GDP2022= 1,200
GDP deflator2022=( 1,200/1,200)*100=100 Nominal GDP2023= 1,430
Real GDP2024=(1,650*125)/100=2,062.5
b. Did economic well-being increase more in 2023 or 2024?
-Having a large GDP enables a country to afford (Better schools, a cleaner
environment, health care, etc.)
- Many indicators of the quality of life are positively correlated with GDP.
Growth rate2023=((1300-1200)/1200)*100%=8.33%
Growth rate2024=((1650-1300)/1300)*100%=26.92%
Since the growth rate in 2024 is higher, economic well-being increased more in 2024. Question 3:
a. Compute the inflation rate using CPI. - Cost of basket: + year 2023: 5*5+2*10= $45 + year 2024: 5*6+2*11=$52 - CPI index: + year 2023: 100 +year 2024: (52/45)*100=115.56
- Inflation rate2024= ((115.56-100)/100)*100%=15.56%
b. If you pick another basket that the relative ratio of fish consumption is higher
than the basket in (a), is the inflation rate for this basket higher or lower
compared to the rate you found in (a)? Briefly justify your answer. - Curent basket:
Rice: 5kg price of rice increased from $5 to $6 ( 20%)
Fish: 2kg price of rice increased from $10 to $11 ( 10%)
If we use a basket that includes more fish and less rice, the overall inflation
rate will be lower because fish had a smaller price increase.
Thus, the inflation rate changes depending on how much the prices of the
items in the selected basket have increased. If a basket contains more of the
good that had a higher price increase, the inflation rate would be higher.
c. If all of the products in the table are final, use the method GDP deflator to
compute the percentage change in the overall price level from 2023 to 2024 - GDP deflator2023=100
- GDP deflator2024= ((120*6+60*11)/ (120*5+60*10))*100=115
- Percentage change=((115-100)/100)*100%=15%
d. Compute the economic growth rate of the year 2024. - Real GDP2023=5*100+10*40=900
- Real GDP2024=5*120+10*60=1200
- Growth Rate= ((1200-900)/900)*100%=33.33%
e. Now, assume that all fish are imported by trading rice with other countries.
How does the answer in (c) change?
If all fish are imported, they are no longer considered part of the country's GDP
because GDP only includes domestically produced goods and services. - New Real GDP2023=5*100=500 - New Real GDP2024=5*120=600
- New Growth Rate= ((600-500)/500)*100%=20% Question 4: a.