Assessment 2- Group assignment

Weighting: 40%

Suggested Due Date: October 31, 2022

Total Marks: 91

Related Course Objectives:

Skills

1) Compile National Income Accounts, Indices and other reported economic statistics from raw data using
various techniques.

2) Use Input/output models to examine the flows of intermediate inputs and final outputs between the
various sectors of the economy.

3) Use the data published by the official and quasi-official agencies to analyze the economic process, so
as to aid in economic planning.

4) Apply the knowledge acquired in further work of model building and economic analysis.

Attitudes

5) Recognize the need for the collection and compilation of social and economic national data.

Question 1

What is the difference between basic, producers’ and purchasers’ prices? (6 marks)

In Crezeta Island, there are only 3 goods: Aloe pie, Roti and Doubles. The following table shows the prices
and quantities produced of these goods in 1990, 2000, and 2010:

1990 2000 2010

Price Quantity Price Quantity Price Quantity
Aloe Pie 2.00 500 1.00 600 1.10 690
Roti 7.00 300 10.00 200 10.50 110
Doubles 0.70 300 4.00 200 0.75 420
 a) A "market bundle" for a typical family is deemed to be 5 Aloe Pie, 3 Roti, and 4 Doubles. Compute
the consumer price index (CPI) for each of the three years, using 1990 as the base year. 9 marks
b) What was the rate of inflation from 1990 to 2000, using the CPI you calculated in (a)? 2 marks
c) Compute the CPI for each of the three years, using 2000 as the base year instead of 1990 but using
the same "market bundle." 10 marks
d) What was the rate of inflation from 2000 to 2010, using the CPI you calculated in (c)? Is it the
same as your answer to (b)? 2 marks
e) Now suppose that a new market bundle is defined; the "market bundle" is now 6 aloe pie, 2 roti,
and 4 doubles. Compute the CPI for the three years, using this "market bundle" and using 1990
as the base year. 9 marks
f) What was the new rate of inflation from 2000 to 2010, using the CPI you calculated in (e)? Explain
why it is different from your answer to (b)? 3 marks

ii.

Using a country of your choice obtain CPI data and reports for 2015 to 2020.

a. Using trend analysis identify the basket (s) of goods which contributed the most to inflation.
10 marks
b. What are the implications of inflation on the country in ‘a’ above?
10 marks

Question 2

Use the Industry and Product Data provided below to construct a Supply Table and Basic Prices and a
Use Table at Producers’ Prices. 20 marks

Products:

• Petroleum
• Natural Gas
• Motor Vehicles
• Electricity
• Distribution

Industries

• Exploration and Production (Sol) extracts Petroleum and Natural Gas for Domestic market and
Exports
• Manufacturing (Rubis) sells Motor Vehicles and Electricity
• Wholesale/Retail Trade (Distr) provide Distributive services
• Public Administration produces Non-Market Services
 Expl & Manufacturing
Production
Petroleum Gas Motor Electricity Wholesale/ Public
Vehicle Retail Admin
Trade
Petroleum Sales 350 270 320 10
Gas Sales 270 250
M/Vehicle Sales 990 1100
Ending Stock 45 15 70
(F/Goods)
Beginning Stock 35 25 60
(F/Goods)
Purchases of 300
Petroleum
Purchases of gas 50 80 220
Purchases of 1000
M/Vehicles
Purchases of imported 230
materials
Purchases of 100 50 60
electricity
Purchases of gov 10
publications
Ending Stock (Purch) 27 66
Beginning Stock 24 53
(Purch)
Purchases of 8 100
electricity
Wages and Salaries 250 470 60 193
Sales tax 100
Consumption and 150 70
fixed capital

Other Data

Exports of Petroleum 390

Exports of Gas 130

Imports of Motor Vehicles 240

Imports of Material 230

Household Consumption

Gas 30
 Electricity 60

Motor Vehicles 800

Fixed Capital Formation

Motor Vehicles 530

Question 3

a. Use the statistical data provided below to complete a simple sequence of accounts including:
10 marks

i. Production Account
ii. Primary Distribution of Income Account
iii. Secondary Distribution of Income Account
iv. Use of Income Account
v. Capital Account

b. Provide estimates for the following key National Accounts Aggregates 10 marks
i. Gross Value added
ii. Gross National Income
iii. Gross Disposable Income
iv. Gross Savings
v. National Lending/Borrowing

Output of Domestically Produced Goods 350

Output of Domestically Produced Services 650
Material Input used in Production 250
Compensation of Employees 600
Current Transfer receivable from Rest of the World 15
Current Transfer payable to the Rest of the World 25
Compensation and Property Income receivable from the Rest of the World 40
Service consumed in production 100
Compensation and Property Income payable to the Rest of the World 10
Capital Transfers from the Rest of the World 10
Gross Fixed Capital Formation 125
Capital Transfers to the rest of the World 10
Inventories 25
Final Consumption Expenditure of Household and Government 400
Fuel, Electricity and Water used-up in production 50
Rubric

Criteria Excellent Good Satisfactory Poor

Question 1 Students show an Students show a Students show Students show
excellent good some little to no
understanding of understanding of understanding of understanding of
the CPI and how the usefulness of the CPI and the CPI and
to calculate the CPI and inflation and are inflation and are
inflation with little inflation. able to calculate unable to
to no errors. the base year calculate the base
however with year without
Steps to change Base year notable errors. major errors
base years are calculated but
identifies and with minor errors. Calculation for
followed precisely Calculation for inflation missing
Step by step inflation shown or cannot be
(51 points) Step by step calculation of but with missing followed. Answers
calculations are inflation shown steps and incorrect.
shown and with with some minor answers.
little no error in steps missing and Calculations
the final answer. some errors in difficult to follow. Students are able
final answers. to show trend
Students are able Students are able analysis on graph
to show trend Students are able to show trend but analysis is not
analysis on graph to show trend analysis on graph in depth and
and analyze analysis on graph but analysis is not categories cannot
results. Category and analyze in depth. Category be identified as
of goods which results with some identified with the main
contributes to errors in little expansion. contributor to
inflation identifies explanations. inflation. Events
with reference to Category of goods contributing to
events which may which contributes the changes not
have contributed to inflation identified or
to such. identifies with explained.
reference to
events which may
have contributed
to the changes.

51 – 43 points 42–34 points 33–26 points 25-0 points

Question 2 Students can Students can Students can Students can
neatly and clearly create the supply create the supply create the supply
create the supply and Use table at and Use table and Use table
and Use table at the required price, with some errors with some errors
the required however, there is in obtaining in obtaining
price. a minor issue in figures at the figures at the
calculation which stated price. The stated price. The
contributes to
 Figures are incorrect balancing figure is balancing figure is
accurately balancing. incorrect. incorrect.
calculated and
(20 points) both tables are
balanced.

20-17 points 16-13 points 12-10 points 9-0 points

Question 3 Students can Students can Students can Students has great
correctly identify correctly identify identify most difficulties in
which items which items items for the identifying the
should be placed should be placed appropriate correct item to be
into the correct into the correct accounts which used in the
account with the account with leads to incorrect appropriate
(20 point) accurate some problems balancing items. account.
balancing item. with the balancing Balancing item
item. National Accounts incorrect.
National Accounts aggregates
aggregates National Accounts calculated with National Accounts
correctly aggregates some errors. aggregates
calculated. calculated with calculated with
minor errors. major errors and
incorrect answers.

20-17 points 16-13 points 12-10 points 9-0 points