You have been given the following data on Pakistan GDP:

Nominal GDPGDP Deflator

Yearin billions of rupees(Base Year = 2006)

201938,559282

201527,443245

a)Calculate the growth rate of nominal GDP between 2015 and 2019. (Hint: the average annual growth for variable X for N-years can be calculated as .) (0.5 Marks)

b)Calculate the growth rate of GDP deflator between 2015 and 2019. (0.5 Marks)

c)Calculate real GDP in 2015 measured in 2006 prices. (0.5 Marks)

d)Calculate real GDP in 2019 measured in 2006 prices. (0.5 Marks)

e)Calculate growth rate of real GDP between 2015 and 2019. (0.5 Marks)

f)Was the growth rate of nominal GDP greater or lesser than the growth rate of real GDP? Explain. (0.5 Marks)

QUESTION: 3

MAXIMUM MARKS: 6

A very small nation of few people is addicted to TikTok application. They produce only Karaoke Mics and Specialized Cameras:

Karaoke MicsSpecialized Cameras

QuantityPriceQuantityPrice

201820Rs.4,00060Rs.10,000

2019246,00010012,000

a)Compute the percentage change in overall price level using the method similar to CPI. Use 2018 as base year and fix the basket at 2 Karaoke Mics and 1 Specialized Camera. (2 Marks)

b)Compute the percentage change in overall price level using the method similar to GDP Deflator. Use 2018 as base year. (2 Marks)

c)Is there any difference between the inflation rates calculated using the CPI and GDP Deflator methods? Explain. (2 Marks)

QUESTION: 4

MAXIMUM MARKS: 3

Pakistan, like most countries, import considerable amount of goods and services produced in other countries. On the contrary, economic theory says, a high living standard is the result of increase in country's production of goods and services. Can you reconcile these two facts? (3 Marks)

QUESTION: 5

MAXIMUM MARKS: 4

A society has decided to reduce the production of consumption goods (decrease consumption) and increase the production of capital goods (increase investment).

a)You are supposed to explain the effect of above mentioned change in society's behavior on economic growth. (2 Marks)

b)What groups in society would benefit from this change? What groups might be hurt? (2 Marks)