Economics Assignment: Macroeconomic Concepts and Models

Running Head: ECONOMICS
ECONOMICS ASSIGNMENT
Name:
Institution:
Date:

ECONOMICS.
Table of Contents
Part A: LO5 - Macroeconomic Concepts and Models.....................................................................1
Question 1: Consumer Price Index..............................................................................................1
Question 2: Gross Domestic Product...........................................................................................1
Part B: AD-AS Model and Economic Growth...............................................................................3
Question 1. Net Migration...........................................................................................................3
Question 2. Analyse Effect of GDP, Inflation and Unemployment.............................................4
Question 3. Recessionary and Inflationary Gap...........................................................................6
Part C: LO6 – Impact of Government on the Macroeconomic Objectives.....................................9
Question 1: Macroeconomic Objectives......................................................................................9
Question 2 Monetary Policy........................................................................................................9
Question 3. Fiscal Policy...........................................................................................................10
Part 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: Application Foreign Exchange...............................................................................14
References......................................................................................................................................16
ii

ECONOMICS.
Part A: LO5 - Macroeconomic Concepts and Models.
Question 1: Consumer Price Index.
It is a complete estimate used for measuring of cost variations in a basket of products and services
illustrative of consumption spending in an economy (Tang, et al., 2018).
The estimation of CPI comprises several classifications which have been made for categorising
consumption objects and on the source of consumer groups like urban and rural. Established on these
guides and sub-guides achieved, the ultimate general index of cost is estimated frequently by national
statistical organisations. It is one of the essential measurements for an economy which is usually founded
upon the weighted average of the cost of products. The CPI provides a knowledge on the cost of living for
individuals (Kim, Ha, & Kim, 2017).
Question 2: Gross Domestic Product.
It is one of the main pointers used to estimate the health of a nation's economy. It signifies the
whole money worth of all products and services manufactured over a particular time period regularly
referred to as the magnitude of the economy (Sayari, Sari, & Hammoudeh, 2018).
a. Calculate the value of Gross domestic product
Y =C + I +G+ ( X−M )
Y is the total output.
C is the individual expenditure
G is the Government expenditure
X are the Exports
M are the Imports
Y =23 , 100+6 , 200+ ( 13 , 300−15 , 100 )
=29 , 300+ ( −1800 )
=27 , 500
b. Why is the Gross Domestic Product understating the figure of economy.
 Lack of sufficient information to be included when estimating the GDP.
 A sizable underground economy. There is a great value of the economy that is not accounted for
in the calculation of economy.
c. Gross domestic product is measured in both real and nominal terms so that we can have some
signal of progression if cost increase and also if cost falls. Nominal GDP is the precise financial
1

ECONOMICS.
unit and a complete GDP in that specific year and Real GDP is a technique of inflation variable
GDP for comparison of years in terms of purchasing power and not only entire money in an
economy (Pan, Wang, Wang, & Yang, 2018).
d. It is an estimation of the complete economic productivity of a nation divided by the number of
individual and regulated for inflation. It is used to collate the standard of living among nations
and over time (Huq & Tribe, 2018).
e. Alternative measure for GDP.
Green GDP
The green gross domestic product is an index of economic progression with the environmental
concerns of that progression catered for. It expresses the GDP in monetary terms and losses of
biodiversity and accounts for prices as a result of climate variation. Most environmental specialists prefer
physical pointers like waste per capita and carbon dioxide emissions per year, which may be gathered as
Sustainable Development Index (Luukkanen, et al., 2019).
Green GDP = GDP - Natural Resources depletion - Cost of Pollution
Index of Sustainable Economic Welfare.
This provides a complete illustration of economic welfare ever since this index adjust the GDP
figures to allow for activities ignored when estimating the Gross domestic product (Hussen, 2018).
Part B: AD-AS Model and Economic Growth
Question 1. Net Migration.
Net Migration is increasing.
The net migration is the change among the figures of immigrants or individuals migrating
into an area and the figures of emigrants or individuals migrating out of an area during a specific
the year. When the figure of immigrants is greater than the figure of emigrants, a positive net
2