Economics Assignment Report

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Economics Assignment
Report
7/27/2018
Student name

1 | P a g e
Contents
Section A....................................................................................................................................2
Section B....................................................................................................................................4
Section C....................................................................................................................................9
Section D..................................................................................................................................11
References................................................................................................................................16

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Section A
Q1) CPI
CPI measures the changes in price level of market basket of consumer goods and services
purchased by households (Reserve Bank of New Zealand, 2018). The CPI is calculated:
Where‘t’ refers to price in given year and ‘b’ refers to base year
t= 1119
b= 1080
CPI = 1119/1080*100
= 103.62
Q2) GDP
a) In Excel file

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b)
Situation Included or Excluded
(in the calculation of GDP)
(i) The voluntary work of a group in cleaning up a local
reserve. Not included
(ii) Activities of the underground economy. Not included
(iii) The purchase of alcohol for a party. Included
(iv) The money spent on cleaning up the mess resulting
from a road accident and hospital care for injured
passengers.
Included
(v) The proceeds from illegal activities that do not go
through a market. Not included
(vi) Spending by the government on new motorways out
of all the main centers. Included
(vii) A student renting a video for the weekend. Not Included
(viii) Non-market activity such as growing your own
vegetables or paving your own driveway. Not included
(ix) A business upgrading its computer network. Included
(x) An electrician does the wiring for his neighbor (a
plumber) in exchange for unblocking his drain, i.e.
payments in kind.
Not included
(xi) A builder build a block of flats. Included
(xii) Paying for electricity. Included
c) It measures total value of everything produced without factoring in debt.
It does not include the value of education except the amount what people pay for it.
It does not include the development of new technology (CEIC, 2017).
d)
The reason to calculate both the indexes is that real values are adjusted for inflation whereas
nominal values are the actual monetary unit count of GDP.
e) Real GDP per capita is a measurement of the total economic output of a country divided by
number of people adjusted for inflation. This measure is calculated to compare the standard
of living between the countries.