SEMESTER SPRING 2013

MACROECONOMICS (ECO403)

ASSIGNMENT NO. 01

DUE DATE: 07TH  MAY, 2013

MARKS: 20

ASSIGNMENT:

The Case:

Gambia is a country located in West Africa. It is surrounded by Senegal, apart from a short strip of Atlantic coastline at its western end. It is the smallest country on mainland Africa. Major exportable products are fish, cotton, peanuts and peanuts products and its exports partners are Hong Kong, Spain and France while importable items are fuel, machinery and manufacturing. Agriculture accounts for 25% of Gross Domestic Product and employs 70% of the total labor force. Hypothetical data on growth rate, inflation, population and labor force of Gambian economy for year 2007 and 2008 is given below:

Suppose after analyzing data for the year 2007, economists of Gambia suggested to work on exportable industries in order to have better growth rates in upcoming years. This strategy changed the overall economic situation and components of Gross Domestic Product (GDP) for year 2008. Comparative statistics of the economy of Gambia for both years is given below:

Due to this strategy, not only exports of Gambian economy increased but unemployment rate also decreased. This decrease in unemployment rate compelled the other sectors to restore and the concomitant repercussions were more industry, production, investment, consumption particularly and improved living standard generally.

Requirements:

With the help of above data, calculate Gambian economy’s:

1. a.        Gross Domestic Product (GDP) for year 2007.
2. b.       Net exports (NX) for the year 2008.
3. c.        Unemployment rate for the year 2007 and 2008.
4. d.       GDP deflator for the year 2008 if real GDP and Nominal GDP for this year are RS.2500 million and Rs.2650 million respectively.

Note: Write down formula and all relevant steps involved in calculations

IMPORTANT:

Marks: (5+4+6+5)