Introduction to Macroeconomics Assignment

Added on - 06 Jun 2020

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INTRODUCTION TOMACROECONOMICS
TABLE OF CONTENTSQUESTION 1...................................................................................................................................1Measuring GDP and Economic Growth..........................................................................................1A) Computing GDP, wages and supplements as well as gross fixed capital expenses..........1B) Computing value of the net exports...................................................................................1C) Explaining the statement...................................................................................................1D) Calculating real GDP growth rate.....................................................................................2E) Computation of labour force..............................................................................................3F) Calculation of employment................................................................................................3G) Unemployment rate in November 2015............................................................................3H) Calculating CPI index.......................................................................................................4I) Computing inflation rate.....................................................................................................4QUESTION 2...................................................................................................................................5MINI CASE: NIKE AND SWEATSHOP LABOUR.....................................................................51) About the criticism of Nike................................................................................................52) About the executives of Nike company.............................................................................53) Suggestions for corporate social responsibilities...............................................................5The United States is likely to Raise Interest Rate soon...................................................................5A) Impact of interest rates on flow of funds among US and Japan........................................5B) Impact of interest rates on supply loanable funds and interest rate in Australia...............6C) Influence of interest rate on exchange rate........................................................................7QUESTION 3...................................................................................................................................7Exchange Rate.................................................................................................................................7A)............................................................................................................................................7B)............................................................................................................................................8C)............................................................................................................................................8D)............................................................................................................................................8E)............................................................................................................................................8Economic Growth and Business Cycle............................................................................................8A) Calculating value of stated output.....................................................................................8B) Contribution of Mark in GDP............................................................................................9C) Comment on observation of Mr. Asaud............................................................................9Balance of Payments........................................................................................................................9A) Current account balance....................................................................................................9B) Capital account balance...................................................................................................10C) Position of US economy..................................................................................................10REFERENCES..............................................................................................................................11
QUESTION 1Measuring GDP and Economic GrowthA) Computing GDP, wages and supplements as well as gross fixed capital expensesGDP = Final ConsumptionExpenditures + Gross operating surplus + (Exports – Imports)GDP = 276552 + 141432 + (58739 – 66166)= 276552 + 141432 + (-7427)GDP= $410557 millionsWages and supplements = GDP at factor cost + Statistical discrepancy + indirect taxes= 325864 + 4661 + 43030= $373555 millionsGross fixed capital expenses = Final ConsumptionExpenditures + indirect taxes + (Exports – Imports)= 276552 + 43030 + (58739 – 66166)= 276552 + 43030 – 7427= $312155 millionsB) Computing value of the net exportsFormula of net exports = Total exports of the products and services – Total imports of productsand servicesIn the present scenario, total exports = $58739total imports = $66166Net exports = $58739 - $66166= -7427 US4 millionOn the basis of net export’s value, it can be said that, economy unable to grow positivelyand fruitful direction. The reason is that exports are lower as compared to the imports.C) Explaining the statementThe meal cooked by cook of the MS Smith was a part of the employment and generatedincome. Therefore, per capita profit in the economy affects adversely by which GDP also1
influenced. which is beneficial in terms of boosting national income. Once MS Smith marriedwith her cook then services provided by her will fall under the social activities where contract ofemployment fall (Mankiw, 2014). As of now activity of cooking become services for the familywhere any kind of salary not provided by MS Smith to cook. Ultimately, the cook do notgenerate any income and unable to contribute in the growth of economy. On the other hand, percapita income within country also reduced which is negative impact on the national income.Hence, it can be said that Ms Smith reduces level of national income and GDP growth rate bothwithin economy after marrying with her cook.D) Calculating real GDP growth rateA term of macroeconomic in which output of the adjusted prices are evaluated of thosegoods which produced within country in one year is known as real Gross Domestic Product (realGDP). With the help of this particular approach, economic health is assessed in appropriatemanner (Borio, 2014). Further by considering chain volume measure real GDP growth rate of2015 and 2016 is computed below:Real GDPof 2015 and 2016 is computed below:2015 quantities at 2015 price = (20*2000) + (10*600) +(20*500) =$560002016 quantities at 2015 price = (20*2100) + (8*650) + (10*700) =$542002015 quantities at 2016 prices = (30*2000) + (8*600) + (10*500) =$698002016 quantities at 2016 prices = (30*2100) + (8*650) + (10*700) =$75200Using chain volume measures computation ofreal GDP growth ratefor both years isstated below:Formula of real GDP growth rate = [(GDP of current year – GDP of previous year) / GDP ofprevious year] *100 (Pettinger, 2013)Real GDP growth rate for 2015 = [(54200 – 56000) / 56000] * 100= (-1800 / 56000) * 100= -3.21%2
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