Economics Assignment: Macroeconomic Concepts and Models

ECONOMIC ASSIGNMENT
Name:
Institution:
Date:

ECONOMICS.
Table of Contents
SECTION A: LO5- MACROECONOMIC CONCEPTS AND MODELS....................................1
QUESTION 1: CPI......................................................................................................................1
QUESTION 2: GDP.....................................................................................................................1
SECTION B: AD-AS MODEL AND ECONOMIC GROWTH....................................................3
QUESTION 1. NET MIGRATION.............................................................................................3
QUESTION 2. ANALYZE EFFECT OF GDP, INFLATION AND UNEMPLOYMENT........4
QUESTION 3. RECESSIONARY AND INFLATIONARY GAP.............................................6
SECTION C: LO6- IMPACT OF GOVERNMENT ON THE MACROECONOMIC
OBJECTIVES..................................................................................................................................8
QUESTION 1. MACROECONOMIC OBJECTIVES................................................................8
QUESTION 2 MONETARY POLICY........................................................................................8
QUESTION 3. FISCAL POLICY.............................................................................................10
SECTION D: LO7 – INTERNATIONAL TRADE AND GLOBAL ECONOMY......................12
QUESTION 1: INTERNATIONAL TRADE............................................................................12
QUESTION 2: BALANCE OF PAYMENT.............................................................................13
QUESTION 3: FOREIGN EXCHANGE..................................................................................13
QUESTION 4: DEMAND AND SUPPLY FOR FOREX EXCHANGE..................................14
References......................................................................................................................................16

ECONOMICS.
Economics Assignment.
SECTION A: LO5- MACROECONOMIC CONCEPTS AND MODELS.
QUESTION 1: CPI
Consumer Price Index, it is the ratio that inspects the weighted average of cost of a bag of
buyer products and services which includes cost of transport, food and health care. It is
determined by taking cost differences for every element in the determined bag of goods and
finding their averages (Liping, Gang, & Jiani, 2008).
QUESTION 2: GDP
a. Calculate the value of GDP. Expenditure Method (Haddad, Bergen, & Florence, 2019).
Y =C + I +G+ ( X−M )
Y is the GDP
C is the household expenditure
G is the Government expenditure
X are the Exports
M are the Imports
(X-M) is the Net Export.
Y =23 , 100+6 , 200+ ( 13 , 300−15 , 100 )
=29 , 300+ ( −1800 )
=27 , 500
b. GDP understate the figure of economy (Hall, 2018).
i. Gross domestic product is not an ideal measure of welfare, some factors that are
essential to good life are not included in output estimation.
ii. Gross domestic goods utilize the market costs to value goods and services, it does
not include the value of nearly all doings taking place out of the markets.
c. In order to cater for inflation.
Nominal GDP is the exact financial unit total of the output in that particular year and the
calculation (Bhandari & Frankel, 2017). Real productivity is a method of inflation
regulating output for comparison of years in terms of buying power and not only total
money in an economy (Fix, Nitzan, & Bichler, 2019).
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ECONOMICS.
d. Real output per Capita estimate the average level of national income which is regulated
for inflation per person (Abad & van Zanden, 2016).
e. Alternative measure for Gross output.
i. Green GDP
National income statistics gives an inadequate estimate of living standards
and welfare and does not give priority to environmental issues which include
depletion of natural resources. The United Nations and the World Bank came up
with the notion of Green GDP (Tian & Wu, 2015, May). It deals with influence of
natural resources to the economy and the costs of pollution. Hence it is possible to
estimate sustainable development.
Green GDP = GDP - Natural Resources depletion - Cost of Pollution
ii. Index of Sustainable Economic Welfare.
This gives a full representation of economic well-being since; this index
regulates the output numbers to permit for actors assumed by GDP (Menegaki &
Tugcu, 2016).
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