M & L Manufacturing Company

ASSIGNMENT FOR FINAL TERM

Economic Analysis for Managers (MACRO)

Q# 1

a. Define the following terms:

i) Gross National Product (GNP) ii) Gross Domestic Product (GDP)

iii) Net Domestic Product (NDP) iv) National Income (NI)

v) Personal Income (PI) vi) Disposable Personal Income (DPI)

b. Distinguish between GNP and GDP.

C. Show how calculate from GDP to Disposable Personal Income (DPI) with an example.

Q# 2

a. Explain the value added method of GDP measurement.

b. What is the expenditure approach of GDP measurement? Explain the expenditure components of GDP.

c. What is the income approach of GDP? Explain the income components of GDP.

Q# 3

a. What is circular flow model? Illustrate the circular model of an open economy.

b. Compare the expenditure and income approach of GDP measurement.

Q# 4

a. Distinguish between nominal GDP and real GDP? Suppose a country is produced the following goods and services in the different years that are given in the below table:

|Year |Food |Shelter |Cloths |

| |Tk/unit |Quantity |Tk/unit |Quantity |Tk/unit |Quantity |

|2006 |50 |1200 |1200 |80 |150 |100 |

|2007 |80 |1500 |1500 |120 |200 |150 |

|2008 |100 |2000 |2000 |175 |250 |200 |

i. Calculate the Nominal GDP for each year;

ii. Find the Real GDP for each year taking 2006 as base year;

iii. Find the GDP deflator for 2007 and 2008.

b. What steps are followed for constructing CPI? Suppose a market basket consists of the following consumption goods which are shown in the table below:

|Year |Wheat...