Assignment 1. MECO121 Max.

points 20

Topic: Calculate CPI and measuring its effects

Submission deadline: Saturday 11 February before 9PM.

Three most sensitive items in a typical urban household basket in Pakistan are milk, wheat
flour, and chicken. On average, an urban household consumes 15 liters of milk, 2 bags of wheat
flour, and 2 whole chickens in a month. The prices of these items, in recent years (data
collected from Lahore), are given as follows:

Chicke
Year n Wheat Flour Milk
2021 164 860 100
2022 177 1100 112
2023 341 1295 136
Source: Pakistan Bureau of Statistics

1. Use the given information to find the cost of consumption of a typical household in
Lahore in the given years. [2 points]
2. Find consumer price index (CPI) for each of the year using 2021 as the base year. [3
points].
3. Calculate inflation using CPI from preceding part. [2 points].
4. According to Labor Force Survey of Pakistan (2020-21) the mean wage in urban Punjab
was 28000 in 2021. Use CPI to convert these 28000 into rupees of 2023. If workers
wages have not changed, then how much increase they should demand to keep their
living standards unchanged? [3 points].

Q2 on next page

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Consider the following table (from Pakistan Economic Survey 2021-22) and answer the
questions given at the end of the table [10 points]:

Expenditures in million rupees (PES 2021-22) 2022

Household final consumption expenditure 36,948,148
NPISH Final consumption expenditure 368944
General government final consumption expenditure 4,019,571
Total investment 5,625,516
Gross Fixed Capital Formation 4,915,681
Private Sector 3,698,625
Public Sector 261,167
General Government 955,888
Change in inventories 664,173
Valuable 45,662
Export of goods and non-factor services 4,277,537
Less import of goods and non-factor services 9,728,877
Expenditure on GDP at market prices  
Plus net primary income 2,931,447
Expenditure on GNP at market prices  
Less indirect taxes 3,215,037
Plus subsidies 459,289
GNP at factor cost  

Questions
Final total consumption expenditures in Pakistan in 2022.
What is the share of private sector in GFCF in Pakistan in 2022?
What is the value of GDP expenditure based?
What is the value of GNP expenditure based?
What percentage subsidies are of GDP expenditure based?

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