Total Marks: 30
Last Date: 20 May, 2014
Suppose HUMANITY is one of the top leading non-profit welfare organizations. Vital target of this organization is to create not only awareness but also to curtail the economic and other serious issues facing the nation. The foundation has over 70,000 centers across the country providing first aid, meal, employment, basic education and easy installment loans. Seven hospitals of cancer disease and food supplies center are also under the supervision of this organization. Foundation target is to decrease at least 1% unemployment this year out of total labor force. Furthermore, one of the important policies of this organization is that all the equipment either sewing machine or rickshaws will be purchased from the domestic market. At the end of June 2015, this organization will collect Rs.100 billion and will spend 43% on meal, 10% for the medical and emergency service, 7% on training and workshops, 21% on easy installment loans, 9% for self-employment awareness programs and 10% on cottage scale industry.
Being a student of macroeconomics, analyze the above scenario and discuss what will be the impact of actions of non-profit organization on domestic investors and on overall macroeconomic indicators.
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By Purchasing all equipments from the domestically , the demand of Commodities will increase and if the demand will increased then Supply of Equipments must be increased (If Supply does not increase it will produce the disequilibrium in marker) if Both the Aggregate Demand & Aggregate Supply is increased so its impact increases the N.I .
I am sharing the main points, read each point try to understand what are these take help from Google then you can solve the GDB scenario.
Keep in mind you have to define what will be the impact of actions of non-profit organization on domestic investors and on overall macroeconomic indicators.
Few important factors of Economic Indicators
2. Money Supply
3. Consumer Price Index
4. Employment Stats
5. Manufacturing Trade Inventories & Sales
6. Balance of payments
Hope this helps :)
I asked the instructor about the gdb, he answered as follows:
Respected Sir, my name is Samra Tariq and my vu id is bc120401009. Sir, I wanted to have some info. form your side. In the first gdb it is mentioned that we have to discuss the impacts of the actions taken by the nonprofit organization on domestic investors as well as on overall macroeconomic indicators. My question to you is that which macro economic indicators are to be discussed, there are many shall we discuss the ones which are covered in our course or any other...this is a bit confusing
Dear Samra Tariq,
Thanks for your concern!
This is stated that there are many macroeconomic indicators like, GDP, unemployment, CPI, inflation etc. It is advised to you read GDB case again and again to clarify your concept that which macroeconomic variable may be affected by the action of particular NGO.
Wishing you best of luck for the whole semester!
Yes instructor is right to tell you about main point we discuss bout it more briefly and its effects by NGO to investor and National Income.
Samra I saw so many indicators but I only wrote in mine which were matching the GDB scenario.
So basically we have to use our common sense here we don't need to write all indicators, just see which of those indicators matching with our GDB scenario then simply write them.
Definition of 'Economic Indicator' A piece of economic data, usually of macroeconomic scale, that is used by investors to interpret current or future investment possibilities and judge the overall health of an economy. Economic indicators can potentially be anything the investor chooses, but specific pieces of data released by government and non-profit organizations have become widely followed - these include:
- The Consumer Price Index (CPI)
- Gross Domestic Product (GDP)
- Unemployment figures
-The price of Cruid Oil
The economic evidence right now seems to indicate that the current output gap is still large enough to allow for additional expansion without increasing the rate of inflation. Therefore reports showing an increase in GDP, or unemployment decreasing, are good news and the market should go up. Any report that shows inflation is higher than expected is bad, because it may indicate that we are overestimating the size of the output gap, and that should cause the stock market to drop. But in a later stage of the economic cycle, when the output gap is smaller or non-existent, those same news items could have the opposite effect on the stock market