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Inflation has a dual effect of rising prices of essentials necessities and reducing the value of money, causing adverse affects on the economy. High inflation rate affects business sectors, household sector and specially the poor sector. It 
reduces the level of the savings and makes difficult to maintain the current living standard. It increases of Cost of production, reduces Quality, making products less competitive in international market and affects  negatively balance of payment. To control inflation, monetary authorities increase interest rate, increases  cost of borrowing which reduce investment & consumption and leads towards high unemployment and low economic growth of the economy. Pakistan has been included in the list of countries having highest inflation rate in the world. History proves that Pakistan has the most unpredictable and varying inflation rate in the world. Major cause is political instability and the decline in the value of Pakistani Rupee which act as a hurdle to stabilize the inflation rate and such fluctuations are being observed on regular basis.You are residing in Islamabad and you are interested to know the annual fluctuations and variations of inflation rate in 2012, 2013 and 2014 in your location at both consumer level as well as the producer level.

Now go to your LMS interface and access a “4-page PDF Document: Price Indices Assignment MGT411.pdf” uploaded there in the “Downloads” tab. Get this document downloaded, extract 
data and solve the following assignment:

Important points 
•   For CPI:  basket of goods include 4 items that  are given in the “4 pages PDF document” 
at serial # 5, 37, 40 and 49 which are:  “Bread (Plain Medium Size), Lawn, Chappal 
(Spounge Bata, Gents) and Petrol (Super” with  the quantities (same for each year) of 21, 
32, 44 and 35 respectively. 
•   For GDP: Use the following formulas to get  the figures of nominal GDP and Real 

  1.   Nominal GDP current=  ∑ Q current x P current  
  2. ™ Real GDP current=  ∑ Q current x P base

For more help and detailed example download PPT file:” Nominal and Real GDP Calculation.ppt ” under the downloadtab at the VULMS of this course. Use the following data for nominal and real GDP:

Required : Determine the inflation rate  from the following perspectives for financial year 2013 & 2014 considering 2012 as the base year:  

a)   Consumption perspective; &       (5 Marks)

b)   Production of years         (5 marks)

(Hint: Quantities remain the same for consum ers and vary for producers in the mentioned three years) 

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Replies to This Discussion

friends kes lecture me se ae hy yeh assignment? mujhy to kahe nahi mili...plz help me

lecture - 4 mei se. plzz read this example which given in lecture  4

The basket contains 20 pizzas and 10 compact discs.

Years Pizza CDs
2002 $10 $15
2003 $11 $15
2004 $12 $16
2005 $13 $15

From this table, we can calculate the inflation rate as:
Years Cost of Basket CPI Inflation rate

2002 $350 100.0 n.a.
2003 370 105.7 5.7%
2004 400 114.3 8.1%
2005 410 117.1 2.5%

GDP Deflator

The GDP deflator, also called the implicit price deflator for GDP, measures the price of output relative to
its price in the base year. It reflects what’s happening to the overall level of prices in the economy

GDP Deflator = (Nominal GDP / Real GDP) ×100
Inflation rate = {(CPI current period – CPI preceding period) / CPI preceding period}*100

Years Nom. GDP Real GDP GDP Deflator Inflation Rate

2001 Rs46, 200 Rs46, 200 100.0 n.a.
2002 51,400 50,000 102.8 2.8%
2003 58,300 52,000 112.1 9.1%

inflation rate 2012 kasy nikly ga

es me preceding period ki prices kon si ayain gi

please solution file upload kr den please.... 

Nida promise karo cheating nai karo gi, phir solution daita hn

ya lo guyz complete solution, edit kr laina as it is paste mat karna. plzzzzz


yai incomplete hai shyd

Please complete solution file bejiye


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