Question
Let's say, government of Bangladesh imported 10 cars each in the year 2019 and 2020 from Japan. The price per car increased by 10% in
Let's say, government of Bangladesh imported 10 cars each in the year 2019 and 2020 from Japan. The price per car increased by 10% in 2020 than 2019. According to BBS, general price level increased at least by 5% in 2020 when compared to 2019. In this context, by using both CPI and GDP deflator concept - explain how the purchase of 10 cars with increasing price in 2020 may influence the general price level increase. Also, suggest whether or not CPI overestimates or GDP deflator underestimates cost of living in the above context.
Case 2: In fiscal year FY2019 (July 2018 to June 2019), Walton Bangladesh Ltd. imported 100 motor bike engines from Singapore. The cost per engine was 45,000 taka. Later, Walton assembled other parts (including body of the bike) produced in Bangladesh (within the same fiscal year). Assembling cost per bike was 30,000 taka. Among these 75 bikes were sold at 100,000 taka on the same fiscal year while rest 25 bikes were recorded as inventory. Which of these above transactions were supposed to be counted in GDP calculation and which were not, and why? Also, calculate at what amount the following transactions may improve Bangladesh's GDP in FY2019?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started