Macro Economics Question

Assignment 2(15 Marks)

 

Year	Price of Pizza	Quantity of Pizza	Price of Burger	Quantity of Burger	Price of coffee	Quantity of Coffee
2019	$ 8	350	$ 10	200	$ 8	150
2020	$ 10	500	$ 12	250	$ 10	250
2021	$ 13	700	$ 14	400	$ 15	400

• Suppose people consume 3 different goods. The following table shows the prices and quantities of each good consumed in 2019, 2020, and 2021.
• Suppose GDP equals $09 trillion, consumption equals $3 trillion, the government spends $2.5 trillion and has a budget deficit of $450 billion.
• What is the Catch-Up Effect. Explain it by giving some Examples. (2 Marks)

• Calculate nominal GDP in each of the three years. (2 Marks)
• Calculate Real GDP in each of the three years, using 2019 as the base year. (2 Marks)
• Calculate the rate of inflation for 2020 and 2021 using the GDP deflator as your price index. Assume that 2019 is still the base year.(2 Marks)
• Using the quantities from 2019 for your market basket, and 2019 as your base year, calculate the CPI for 2019, 2020 and 2021. (2 Marks)
• Using the CPI calculate the rate of inflation. (2 Mark)

 

• Try to find public saving, taxes, private saving, national saving, and investment.

(3 Marks)