(ECO403)

Bc2202209250
Assignment no 1
Anisa Munawar 8
The Case:
Libya is situated in North Africa. The economy of Libya is heavily dependent on oil
production and exports.
Suppose the economy of Libya is only producing two commodities i.e.; wheat and
oranges. Table-1 shows the quantities of these commodities along with their prices
for different years.
.
Table-1
Years Price of Quantity of Price of Oranges Quantity
Wheat per Kg Wheat produced per Kg Of Oranges
(Rs.) (Rs.) produced
2019 30 3000 kg 10 1000 kg
2020 31 5000 kg 15 2500 kg
2021 40 7000 kg 17 3500 kg

Requirement # 1:
Keeping in view the information provided in the above table for the economy of
Libya, Calculate;

I. Nominal GDP for the year 2021

II. Real GDP for the year 2021 (By taking 2019 as a base year)

(Note: Write down the formula and all relevant steps involved in the calculation)
(Marking scheme: 2 + 2)
Let's break it down step by step.

Requirement #1: 4
I. Nominal GDP for 2021
Nominal GDP=Σ(Pᵢ Qᵢ)
For 2021 :
Wheat :40 7000=Rs . 280,000
Oranges :17 3500=Rs .59,500
Nominal GDP 2021=280,000 +59,500=Rs . 339,500

II. Real GDP for 2021 (Base Year: 2019)

Real GDP=Σ(Pbase Qcurrent )
For 2021 :
Wheat :30 7000=Rs . 210,000
Oranges :10 3500=Rs . 35,000
Real GDP 2021=210,000+35,000=Rs . 245,000

Requirement # 2:
Suppose the facts and figures of the economy of Libya for the year 2020 and 2021 is
given below. Complete the missing values by using the information given in the
table.

Items (Rs.) 02 Year 2020 Year 2021

Consumption 35000 55000

Investment 15000 25000
Government expenditures 5000 35000
wrong
Net exports 10000 15000
Gross Domestic Product (GDP) 80,000 130,000

(Marking scheme: 2 + 2)

Requirement #2:
To find Government expenditures in 2021:
GDP=Consumption+ Investment +Government expenditures + Net exports
80,000=55,000+25,000+Government expenditures +15,000
Government expenditures=80,000−55,000−25,000−15,000=Rs . 5000

Requirement # 3:
Suppose the facts and figures of the economy of Libya for the year 2021 are given
below. Calculate the unemployment rate for the year 2021.

Note: Write down the formula and all relevant steps involved in the calculation)

Year 2021

Population 6.87million
 Real interest rate 5.5%

Inflation 3.5%

No of employed people 5,00,000

No of unemployed people 3,50,000

(Marking scheme: 02)

Requirement #3:2
Unemployment Rate formula:
Unemployment Rate =(No of unemployed people/ Labor Force)100
Labor Force=No of employed people+ No of unemployed people
Labor Force=500,000+350,000=850,000
Unemployment Rate =(350,000 /850,000)100=41.18 %