Rift Valley University HH Campus

Faculty of Business and Economics

DEPARTMENT OF ECONOMICS
GROUP ASSIGNMENT OF MACROECONOMICS
FOR BUSINESS MANAGEMENT
(ONE TO FIVE (1-5) GROUP MEMBER)
DIVISION: EXTENSION
MAXIMUM LOAD: 25%
 INSTRUCTION:
 Hand writing has own value
 It must be submitted Before final Exam Two week in 2023
I) COMPUTE THE FOLLOWING GIVEN BELLOW
1. Given the following data on National Income Account of hypothetical economy.
Personal consumption expenditure_______________________________________7640
Gross private domestic investment_______________________________________4400
Government purchase of goods and services_______________________________2450
Export_____________________________________________________________1800
Import_____________________________________________________________1950
Net factor income from abroad___________________________________________820
Indirect business tax___________________________________________________850
Subsidy_____________________________________________________________625
Compensation for employees____________________________________________4500
Rental income________________________________________________________730
Depend on the above National Income Account of hypothetical economy calculate
a) GDP
b) GNP
c) Real GDP if GDP deflator is 100
2. The following is hypothetical data of country X, expressed in million birr.
Personal consumption expenditure_______________________________________1240
Compensation for employees____________________________________________1100
Proprietors’ income____________________________________________________1500
Government purchase of goods and services________________________________1000
Public transfer________________________________________________________1200
Interest income_________________________________________________________120
Export_______________________________________________________________1860
Import_______________________________________________________________3550
Rental income__________________________________________________________540
Indirect Business Tax___________________________________________________2300
Depreciation___________________________________________________________920
Income earned by foreigners from domestic country___________________________2200
Gross private domestic investment_________________________________________2950
Income earned by nationals from abroad____________________________________2600
Corporate profit________________________________________________________2700

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Depend on the above National Income Account of hypothetical economy calculate the following.
a) The GDP by using expenditure approach
b) The GDP by using income approach
c) The GNP
d) If price is 120, what is real GDP?
e) The GDP deflator
f) Economic growth rate if the given base year GDP is 10,500 billion birr
3. Consider an economy producing two goods X and Y.

Year Product Quantity Unit price ($)

2010 X 30 15
Base year
Y 10 60

2011 X 30 25

Y 20 80
Note that:
 Both the real and nominal GDP values are exactly the same in the base year.
 2010 assumed as base year
a) Calculate 2010 nominal and real GDP
b) Calculate 2011 nominal and real GDP
4. Given the following data of chicken wings and burger on National Income Account of
hypothetical economy
Price of Quantity of Price of burger Quantity of
Year chicken wings chicken wings burger

2008 2 60 6 50

2009 4 120 8 80

a) Calculate nominal GDP

b) Calculate real GDP
c) Calculate GDP deflator
d) Calculate CPI
5. Consider an economy producing three goods X, Y and Z
Good Quantity 2010 2011 2012
Base year

X 200 20 25 20

Y 50 10 64 75

Z 30 200 106 120

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 a) Consumer price index(CPI)

b) Calculate inflation rate (IR)

II) BRIEFLY DISCUSS THE FOLLOWING QUESTIONS

1. Define consumption function and explain how consumption is related to other

economic variables.

2. Identify and explain different consumption theories.

3. Discuss the role of consumption in aggregate demand.

4. Explain the relationship between MPC and MPS.

5. Discuss Keynesian Consumption Puzzle.

6. Explain why marginal propensity is positive but less than one.

7. Why Keynes’ theory is valid in short-run, but not in long run?

8. How can the Kuznet consumption functions and the Keynesian consumption

functions or theories can be reconciled? Discuss.

9. Discuss and briefly explain relationship between Investment and saving.

10.Write and discuss the types of investment.

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