1

a) The value of Gdp is :-

GDP = C + I + G + (X – M)
=400+60+120+(100-120)
=560

b).The value of net export is:-

NE= X-M
=100-120
= -20

c) .The value of NNP is:-

NNP = GNP - Depreciation
= 562 - 40
=522

3.
Ans:- Though the base year is 2010, the CPI is 100. To calculate the CPIfor 2011, we
need to calculate the total basket of goods in both years.
2010: Npr 200+75+50= Npr 325
2011: Npr 225+120+100= Npr 445

b. CPI: [(Total Dollar Purchases Year 1)/(Total Dollar Purchases Year 0)]*100
Npr 445 / 325 * 100 = 136.92
Therefore the CPI is 136.92 for 2011.

C.
In this case:
2010: Npr 2/Head of Cauliflower, Npr1.5/Bunch of Broccoli Npr.10/Carrot -Total of
prices per unit = Npr3.60
2011: Npr3/Head of Cauliflower, Npr1.5/Bunch of Broccoli Npr 50/Carrot -Total of
prices per unit = Npr 5.00

The inflation rate in 2011 s using the CPI is:

(Npr 5.00 - 3.60)/ 3.60]*100=38.8888%

Therefore the rate of inflation is 38.89% for 2011.

4.
a. The purchase of a new refrigerator will lead to an increase in the GDP
consumption component. Thus the GDP will increase by the amount of
refrigerators purchased .
b. Aunt J buys a new house which is a residential Fixed investment by Aunt J and
would contribute to the GDP. Therefore, this action will affect the GDP.
c. Mustang being sold from inventory will be included in GDP in the component of
heading "Change in inventories" Thus will be part of Investment of the GDP
d. Buying pizza is a part of the consumption component of the GDP. Thus it is
included in GDP.
e. Paving of highways by government is a government expenditure, thus included in
the G heading of GDP.
f. Parents buy the bottle of French Vine. This is the expenditure on the final product
which contributes to the GDP. Therefore, this action will affect the GDP.
g. Expansion of factories is an investment by Honda, thus included in GDP.
h. It will increase the Gdp of Japan and increase net export.
i. It will increase his country's GNP, increase NFIA and decrease some portion of
Gdp of Rome .
j. It will increase revenue of Mosco as a result GDP increases .