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Economic growth and inflation are two most important macroeconomic factors affecting an economy. The main objective of the macroeconomic policy makers is the high and sustained economic growth with low inflation rate. The relationship between economic growth as measured by GDP; and inflation rate as measured by CPI or GDP deflator; depends on the economic situation of the economy. High economic growth or GDP, without an increase in inflation rate, is possible if the potential output of the economy is growing enough to keep pace with demand. If demand increases continuously, and the productive capacity or GDP does not expand, there is a danger of rapid increase in general price level in the long run leading to high inflation rate in the economy.

Requirement # 1

Suppose an economy produces only two goods; apples and oranges. Calculate the following by using information given in the table.

a. Nominal GDP for year 2010
b. Real GDP for year 2010 by taking 2009 as base year c. GDP deflator for year 2010

page1image17880 page1image18040

Year 2009

page1image21656

Year 2010

Goods

Price (Rs.)

page1image24536

Quantity

Price (Rs.)

page1image27288

Quantity

Apples

200

130

245

160

Oranges

350

150

430

170

Requirement # 2

(Marks: 1.5+1.5+2)

page2image3264

Calculate the cost of basket, Consumer Price Index (CPI), and inflation rate by using information given in the table.

Price (Rs.)

Quantity

Years

Apples

Oranges

Apples

Oranges

Cost of basket

CPI

Inflation rate

2009

200

350

130

150

?

?

----

2010

page2image38864

245

430

page2image41520

160

page2image43536

170

?

page2image46200 page2image46792

?

?

(Marks: 1+1+1+1+1) 

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Replies to This Discussion

net bht problem kr rha so sory fellows sol bta dia h mn nay ab thori mehnat ap khud kro or type kr lo

solution to bta dia pr solve kesy kiya values kesy nikali?

bhai mn formula say kiay hn mn lec no bta to chuki hn apk pass book nhi h kia lec no 5 page no 12 pay h formula 1st question ka
lec no 6 page no 16 pay hn 2nd ka..ap nay 7 mint pehly kia reply mn tab ki koshsh kr rhi hn open krny ki ab hua h

solution file post kro plz sis

     question 1 ka 3rd par mis hogya wo ye h

GDP deflator = Nominal GDP/Real GDP *100

               = 112,300/91,500*100

               = 122.7

Attachments:

thnx dear :) :)

HI, plzzzzz help i did not find in lecture no 6

me also having MBS subjects semester 2nd

sana sister mn b 2nd smstr ki hi hn...or kiun nhi mila apko sis wahan pay formula chek karain solve khud karain bhtr h ap k liay wrna abdul hasib bhai ki file thk h wo thori edit kr k post kr dain

is it correct or not?

Attachments:

correct h

q. 1
question 1 answer:
Year (2010),Nominal GDP (112,300),Real GDP(91,500),GDP Deflator(122.7),
if any confusion chek lec no 5 plz
question no 2 ans
Sol.2
1. The cost of the basket-2009
= 78,500
The cost of the basket-2010
= 112,300
2. The CPI-2009
= 100 
The CPI 2010 (base year 2009)
= 143.06
3. Inflation Rate
The inflation rate 2010
= [(143.06-100)/100]*100
=43.06

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