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# Assignment No. 1 will be opened on May 12, 2016 and due date of assignment submission will be May 18, 2016.

 Announcement for Assignment Dated: May 11, 16 Important announcement Assignment # 01 MACRO ECONOMICS (ECO403)   Dear Students! This is to inform that Assignment No. 1 will be opened on May 12, 2016 and due date of assignment submission will be May 18, 2016. A 24 hours extra/grace period after the due date is usually available to overcome uploading difficulties which may be faced by the students on last date.  This extra time should only be used to meet the emergencies; and above mentioned due date should always be treated as final to avoid any inconvenience.

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Year Cost of basket CPI Inflation Rate
2011 5300 100.00 N/A
2012 7500 141.50 41.50%
2013 9700 183.01 29.33%
2014 13800 260.37 41.78%
Solution # 1

Question# 2

Years Nominal GDB Real GDB GDP Deflator Inflation Rate
2013 13020 13020 100 N/A
2014 16529 15666 105.51 5.51%
2016 18930 17526 108.01 2.37%

Working# 1
Inflation Rate 2013 = N/A
Inflation Rate 2014 = [(105.51 – 100)/100] * 100 = -1.65%
Inflation Rate 2015 = [( 108.01 – 105.51)/105.51] * 100 = 2.68 %

GDP Deflator =Nominal GDB / Real GDB

 Prices Years Perfumes Food items Cost of basket CPI Inflation rate 2011 500 30 (10*500)+(10*30)=5300 5300/5300*100=100 …. 2012 700 50 (10*700)+(10*50)=7500 7500/5300*100=141.5 {(141.5-100)/100}*100=41.5% 2013 900 70 (10*900)+(10*70)=9700 9700/5300*100=183.0 {(183.0-141.5)/141.5}*100=29.3% 2014 1300 80 (10*1300)+(10*80)=13800 13800/5300*100=260.3 {(260.3-183.0)/183.0}*100=42.2%

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