Question 1: Olick, D.

2018, ‘Rising mortgage rates hit new home sales hard, an ominous sign
for builders’, CNBC, 26 Feb, viewed on 7 March 2018,
<https://www.cnbc.com/2018/02/26/rising-mortgage-rates-hit-new-home-sales-hard-a-bad-sign-
for-builders.html>

 Based on the article, there is new tax law was signed by the U.S government which led to
the mortgage rates increase from less than 4 percent to over 4.25 percent, hence made lots
of homebuyers unable to afford the house price and sales started to fall from December
2017 onwards.
 In this case, limited resource is capital of homebuyers as they do not have enough money
and planning to borrow from bank. Unfortunately, mortgage rates are getting higher
which is stopping them from investing.
 Higher mortgage repayments on borrowing has an opportunity cost, homebuyers could
have spent their money on other investments and could have better net return than paying
off mortgage. However, for builders the question is ‘whether they should continue with
their current job or make a career change’. If builders decide to change then it would be
hard to get back when the market grow again and if not then they might have to suffer
from not making money in a short time.

Question 2:

A) 1: Thailand is ranked 77 in the Gross National Income (GNI) per capita ranking and ranked
88 in Human Development Index (HDI) ranking.

II: Gross National Income measures the sum of a nation Gross Domestic Product add the net
income from overseas (World Bank 2016). This means that a particular country with high
income receipts from abroad is more likely to have high GNI and for Thailand, it is classified
in upper-middle income group with around $15,000 GNI per capita (HDR 2014). On the
other hand, Human Development Index shows the basic dimensions of human development
based on three factors which are life expectancy, education included both mean years of
schooling and expected years of schooling. Last is standard of living measured by GNI per
capita (HDR 2016). Thailand is classified in High Human Development group which means
they have higher life expectancy or higher mean years of schooling compared with countries
 in middle and low classes. Although both indicators show different measurement, they both
ranking are not quite different from each other. This is because both GNI and HDI rankings
have some relationship, the increment of GNI would also increase in HDI ranking as HDI
also take GNI per capita into consideration. At the same time, when GNI increase which
means that people are getting higher income, hence they will have better health as well as
better education. In short, GNI and HDI rankings would increase and decrease at the same
pace.

B)

Price and Quantities

YEAR Prices of Grain Qty of Grain Prices of Oil Qty of Oil
First Year $3 100 $5 50
Second Year $3.5 110 $5.5 55

Nominal GDP

 First Year: ( 3 ×100 ) + ( 5 ×50 )=$ 550

 Second Year: ( 3.5 ×110 ) + ( 5.5 ×55 )=$ 687.5

Growth rate of NGDP: ( ( 687.5 ÷ 550 )−1 ) ×100=25 %

Real GDP

 First year: ( 3 ×100 ) + ( 5 ×50 )=$ 550

 Second year: ( 3 ×110 ) + ( 5 ×55 )=$ 605

Growth rate of RGDP: ( ( 605−550 ) ÷ 550 ) ×100=10 %

GDP deflator: ( 687.5 ÷ 605 ) × 100=113.636363

References

Human Development Report (HDR) 2016, Human Development for Everyone. United Nations
Development Programme (UNDP), pp.1-3, viewed on 8 March 2018
<http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/THA.pdf>

Human Development Report (HDR) 2014, Table 1: Human Development Index and its
components. United Nations Development Programme (UNDP), viewed on 6 March 2018
<http://hdr.undp.org/en/composite/HDI>

World Bank 2016, GNI per capita, Atlas method, viewed on 7 March 2018
<https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations=TH>