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    Assignment 1 Solution Eco 403

    Uploaded by

    Mubeen Raza
    This document provides solutions to economics assignment questions using data on the production of apples and mangoes in two years. The nominal GDP for 2021 is calculated as Rs. 82,900. The real GDP for 2021 using 2020 as the base year is Rs. 80,000. The GDP deflator for 2021 is 103.625. Using data on the price and quantity of apples and mangoes, the cost of a basket of goods, consumer price index, and inflation rate are calculated for 2020 and 2021. The inflation rate from 2020 to 2021 is 20.1%.

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    Assignment 1 Solution Eco 403

    Uploaded by

    Mubeen Raza
    612 views2 pages
    This document provides solutions to economics assignment questions using data on the production of apples and mangoes in two years. The nominal GDP for 2021 is calculated as Rs. 82,900. The real GDP for 2021 using 2020 as the base year is Rs. 80,000. The GDP deflator for 2021 is 103.625. Using data on the price and quantity of apples and mangoes, the cost of a basket of goods, consumer price index, and inflation rate are calculated for 2020 and 2021. The inflation rate from 2020 to 2021 is 20.1%.

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    ASSIGNMENT 1 SOLUTION ECO 403

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    This document provides solutions to economics assignment questions using data on the production of apples and mangoes in two years. The nominal GDP for 2021 is calculated as Rs. 82,900. The real GDP for 2021 using 2020 as the base year is Rs. 80,000. The GDP deflator for 2021 is 103.625. Using data on the price and quantity of apples and mangoes, the cost of a basket of goods, consumer price index, and inflation rate are calculated for 2020 and 2021. The inflation rate from 2020 to 2021 is 20.1%.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    612 views2 pages

    Assignment 1 Solution Eco 403

    Uploaded by

    Mubeen Raza
    This document provides solutions to economics assignment questions using data on the production of apples and mangoes in two years. The nominal GDP for 2021 is calculated as Rs. 82,900. The real GDP for 2021 using 2020 as the base year is Rs. 80,000. The GDP deflator for 2021 is 103.625. Using data on the price and quantity of apples and mangoes, the cost of a basket of goods, consumer price index, and inflation rate are calculated for 2020 and 2021. The inflation rate from 2020 to 2021 is 20.1%.

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    © All Rights Reserved
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    ASSIGNMENT 1 SOLUTION ECO 403

    QUESTION NUMBER 1:
    Suppose an economy produces only two goods; apples and mangoes. Calculate the following by
    using information given in the table.
    Year 2020 Year 2021
    Goods Price (Rs.) Quantity Price (Rs.) Quantity
    Apples 250 120 260 140
    Mangoe 300 130 310 150
    s

    A. Nominal GDP for year 2021.


    Solution:

    = [2021 P(A) X 2021 Q(A)] + [2021 P(M) X 2021 P(Q)]


    = [ 260 × 140] + [ 310 × 150]
    = 36,400 + 46,500
    = 82,900 Rs.
    B. Real GDP for year 2021 by taking 2020 as base year.
    Solution:

    = [2020 P(A) × 2021 Q(A)] + [2020 P(M) × 2021 P(Q)]


    = [250 × 140] + [300 × 150]
    = 35,000 + 45,000
    = 80,000 Rs.
    C. GDP deflator for year 2021.
    Solution:

    Nomial GDP
    GDP Deflator = × 100
    Real GDP

    82,900
    GDP Deflator = × 100
    80,000

    GDP Deflator = 1.03625 × 100

    GDP Deflator = 103.625 Rs.


    QUESTION NUMBER 2:
    Calculate the cost of basket, Consumer Price Index (CPI), and inflation rate by using information
    given in the table.
    Price (R s.) Quantity
    Yea Apple Mangoe Apple Mangoe Cost of Basket CPI Inflation rate
    r s s s s
    202 250 300 120 130 (120×250)+(130×30 69,000 -----------------
    = ×
    0 0) = 69,000 Rs. 69,000
    100
    = 100 Rs.
    202 260 310 140 150 (140×260)+(150×31 82,900 = {(120.1 -
    = ×
    1 0) = 82,900 Rs. 69,000 100)/100}×10
    100 0
    = 120.1 = 20.1%
    Rs.

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