Macro Economics

1The Assignment must be submitted on Blackboard (WORD format only) via allocated

1The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
• Due date for Assignment 2 is by the End of Week 10(11/02/2023)
• 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 (15 Marks)
Price of Pizza
Quantity of Pizza
Price of Burger
Quantity of Burger
Price of coffee
Quantity of Coffee
$ 8
$ 10
$ 8
$ 10
$ 12
$ 10
$ 13
$ 14
$ 15
1. Suppose people consume 3 different goods. The following table shows the prices and quantities of each good consumed in 2019, 2020, and 2021.
a. Calculate nominal GDP in each of the three years. (2 Marks)
b. Calculate Real GDP in each of the three years, using 2019 as the base year. (2 Marks)
c. Calculate the rate of inflation for 2020 and 2021using the GDP deflator as your price index. Assume that 2019 is still the base year. (2 Marks)
d. 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)
e. Using the CPI calculate the rate of inflation. (2Mark)
2. Suppose GDP equals $09 trillion, consumption equals $3 trillion, the government spends $2.5 trillion and has a budget deficit of $450 billion.
• Try to find public saving, taxes, private saving, national saving, and investment.
(3 Marks)
3. What is the Catch-Up Effect. Explain it by givingsome Examples.(2 Marks)