Economics Assignment: LO5- Economic Concepts, LO6- Impact of Government on the Macroeconomic Objectives, LO7- International Trade and Global Economy

ECONOMICS ASSIGNMENT.
Name:
Institution:
Date:

Table of Contents
Part A: LO5- Economic Concepts............................................................................................................1
Section 1: Consumer price index.............................................................................................................1
Section 2: Gross domestic product..........................................................................................................1
Part B: AD-AS Model and Economic Growth........................................................................................3
Section 1. Migration................................................................................................................................3
Section 2. Effect of GDP, Unemployment and Inflation..........................................................................4
Section 3. Recessionary and Inflationary Gap.........................................................................................6
Part C: LO6–Impact of Government on the Macroeconomic Objectives.............................................8
Section 1. Government’s Macroeconomic Objectives.............................................................................8
Section 2 Monetary Policy.......................................................................................................................8
Section 3. Fiscal Policy...........................................................................................................................9
Part D: LO7 – International Trade and Global Economy....................................................................11
Section 1: International Trade................................................................................................................11
Section 2: Balance of Payment..............................................................................................................11
Section 3: Foreign Exchange.................................................................................................................12
References.................................................................................................................................................15
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ECONOMICS.

Economics Assignment.
Part A: LO5- Economic Concepts.
Section 1: Consumer price index.
It is the proportion that inspects the measured average cost of purchased products and services
which comprises prices of transport, sustenance and health care. It is determined by taking cost
variances for every component in the determined products and calculating their averages
(Faryna, Talavera, & Yukhymenko, 2018).
Consumer price index = (Cost of Basket in current period/Cost of Basket in base period) X 100
Section 2: Gross domestic product.
a. Below is a Calculation of Gross domestic product using the Expenditure method (Choi &
Yi, 2018).
Y = C + I + G + (X - M)
Y is the Total Output also referred to as Gross domestic product.
C is the household expenditure
G is the Government expenditure
X are the Exports
M are the Imports
(X-M) their difference gives a Net Export.
GDP = 23,100 + 6,200 + (13,300 – 15,100)
= 29,300 -1,800
=27,500
b. 2 reason why GDP may understate the figure of economy (Fullerton & Muehlegger,
2019).
 GDP is not a perfect measure of wellbeing, some influences that are necessary
to good life are not incorporated in GDP Estimation.
 GDP uses market prices to charge goods and services, it does not incorporate the
cost of almost all undertakings outside the markets place.
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