Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية الإلكترونية
College of Administrative and Financial Sciences
Assignment 2
Macroeconomics (ECON 201)
Release Date is 16/10/2022
Course Name: Macroeconomics Student’s Name:
Course Code: ECON201 Student’s ID Number:
Semester: Ist CRN:
Academic Year:2022-23-Ist
For Instructor’s Use only
Instructor’s Name:
Students’ Grade: 00 / 10 Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
• Due date for Assignment 1 is by the End of Week 9 (29/10/2022)
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
• Submissions without this cover page will NOT be accepted.
Assignment 2 Questions: Chapter 10 & 11
(10 Marks)
1. National income accounting deals with the aggregate measure of the outcome of economic activities. The most common measure of the aggregate production in an economy is Gross Domestic Product (GDP). The table below provides Country’s national income accounting. Use this data to answer the following questions.
Transfer Payments $ 54
Interest Income $ 186
Depreciation $ 36
Wages $ 67
Gross Private Investment $ 124
Business Profits $ 274
Indirect Business Taxes $ 74
Rental Income $ 75
Net Exports $ 18
Net Foreign Factor Income $ 12
Government Purchases $ 156
Household Consumption $ 304
a. Calculate the GDP by using the Expenditure Approach Method (1Mark)
b. Calculate the GDP by using the Factor Payment Approach or the Income Approach Method. (1 Mark)
Year Price of Pizza Quantity of Pizza Price of Burger Quantity of Burger Price of coffee Quantity of Coffee
2006 $ 4 200 $ 6 125 $ 8 100
2007 $ 6 350 $ 8 200 $ 9 175
2008 $ 7 600 $ 9 350 $ 12 250
2. Suppose people consume 3 different goods. The following table shows the prices and quantities of each good consumed in 2006, 2007, and 2008.
a. Calculate nominal GDP in each of the three years. (1.5 Marks)
b. Calculate Real GDP in each of the three years, using 2006 as the base year. (1.5 Marks)
c. Calculate the rate of inflation for 2007 and 2008 using the GDP deflator as your price index. Assume that 2006 is still the base year. (2 Marks)
d. Using the quantities from 2006 for your market basket, and 2006 as your base year, calculate the CPI for 2006, 2007 and 2008. (2 Marks)
e. Using the CPI calculate the rate of inflation. (1 Mark)
Answer:
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