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NAME : ______________________________ Q1: Q2: Q3: Q4: What are the Government’s 4 economic objectives ? What do you understand by “General Equilibrium”?

Define the term “GDP”, “CPI” & Inflation. For the following data, calculate :

STUDENT ID: ________________________

(a) The nominal GDP for each of the years 2001, 2002 & 2003 (b) The real GDP for each of 2002 & 2003, taking 2001 as base year. (c) The CPI for the years 2002 & 2003, taking 2001 as base year. (d) The annual inflation rate for 2003. Q5: Q6: What is the Expenditure approach to the measurement of GDP? Consider an economy that produces only three types of fruits: apples, oranges and bananas. In the base year the production & prices data were as follows: FRUIT Apples Bananas QUANTITY 3000 bags 6000 bunches PRICE $2 per bag $3 per bunch $4 per bag PRICE $3 per bag $2 per bunch

Oranges 8000 bags In the current year, the production & price data are as follows: FRUIT Apples Bananas QUANTITY 4000 bags 14000 bunches

Oranges 32000 bags $5 per bag a. Find the nominal GDP in the current year and in the base year. What is the percentage increase since the base year? b. Find the Real GDP in the current year and in the base year. By what percentage does the real GDP increase from the base year to the current year? c. Find the GDP deflator for the current year and the base year. By what level does the price level change from the base year to the current year? (NOTE: THE ASSIGNMENT MUST BE HANDWRITTEN, PRINTED SOLUTION WILL NOT BE ENTERTAINED AT ALL !!!) ASSIGNMENT SUBMISSION DATE = 7TH JULY 2012 (POSITIVELY)