ECO403 Assignment 1 Solution Fall 2021
Requirement 1Solution
Formula Hint: Price x Quantity = Price Quantity
Nominal GDP for the year 2015
= 100 x 1000 + 70 x 700
= 100,000 + 49,000
= 149,000
Nominal GDP for the year 2016
= 105 x 1500 + 75 x 900
= 157,000 + 67,500
= 224,500
Nominal GDP for the year 2017
= 110 x 1700 + 80 x 1000
= 187,000 + 80,000
= 267,000
Requirement 2
Solution
Formula Hint: Nominal GDP / Real GDP x 100
Table 2
| Years | Nominal GDP | Real GDP | GDP deflator |
| 2018 | Rs. 30,000 | Rs. 30,000 | 100 |
| 2019 | Rs. 35,000 | Rs. 33,000 | GDP Deflator = Nominal GDP / Real GDP x 100 GDP Deflator = 35,000 / 33,000 x 100 = 106.06 |
| 2020 | Rs. 40,000 | Rs. 37,000 | GDP Deflator = Nominal GDP / Real GDP x 100 GDP Deflator = 40,000 / 37,000 x 100 =108.10 |
Requirement 3
Solution
Formula Hint: Y = C + I + G + NX
Table 3
| Items (Rs.) | Year 2010 | Year 2011 | Year 2012 | Year 2013 | Year 2014 |
| Consumption (C) | Y=C + I + G + NX 100,000 = C + 15,000 + 25,000 + 10,000 = 10,000 = C + 50,000 = Calculate Yourself | 55,000 | 65,000 | 63000 | 60000 |
| Investment (I) | 15,000 | Y=C + I + G + NX 99,000 = 55,000 + (I) + 21,000 + 11,000 = Calculate Yourself | 17,000 | 13000 | 22000 |
| Government expenditures (G) | 25,000 | 21,000 | Y=C + I + G + NX = 118,000 = 65,000 + 17,000 + G + 7,000 = Calculate Yourself | 20000 | 17000 |
| Net exports (NX) | 10,000 | 11,000 | 7,000 | Y=C + I + G + NX 10,9000 = 63,000 + 13,000 + 20,000 + NX = Calculate Yourself | 11000 |
| Gross Domestic Product (GDP) (Y) | 100,000 | 99000 | 118,000 | 109000 | Y=C + I + G + NX |
| = Y = 60000 + 22,000 + 17,000 + 11,000 = Calculate Yourself |
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