Institute of Business Management

Macroeconomics
Semester 2

Course Instructor: Irfan Lal Total Marks:100 Weighted 5

Due Date: Before first hourly exam

Assignment No.1

Q# 1 Define Macroeconomics and shortly explain main issues of Macroeconomics?

Q#2 Numerical question no. 1 chapter no.1.

Q#3 Differentiate
 a). Stock and Flow variable
 b) Economic growth and economic development
 c) Classical and Keynesian school of thoughts
 d) CPI and GDP deflator
 e) GDP at factor price and market price

Q#4 Explain concept of National wealth and national saving?

Q#5 What are the three approaches to measuring economic activity? Why do they give same answer?

Q#6
a) Explain all Measures of National Income (GDP, GNP, NNP, NDP, PI, PDI)
b) real GDP or nominal GDP? Which is the more important statistc for assessing an economic growth and why?

Q#7 What is unemployment discuss types of unemployment?

Q# 8 chapter 3 (Productivity, Output and Employment) Numerical Question No. 1

Q# 9 chapter 3 (Productivity, Output and Employment) Numerical Question No. 3

a, Find the MPN for each level of employment,

b, Acme can get $5 for each widget it produces. How many workers will it hire if the nominal
wage is $38, if it is $27? If it is $22?

c, Graph the relationship between Acme’s labor demand and the nominal wage. How does this
graph differ from a labor demand curve? Graph Acme labor demand curve.

d, With the nominal wage fixed at $38, the price of widgets doubles from $5 each to $10 each.
What happens to Acme’s labor demand and production?

Q#10 chapter 3 (Productivity, Output and Employment) Numerical Analytical Question No. 2

Q#11 In April 2000, the United States had a labor force of 141,230,000, employment of 135,706,000, and
there were 67,986,000 people not in the labor force (all numbers rounded to the nearest 1000).
(a) Calculate the unemployment rate.
(b) Calculate the participation rate.
(c) Calculate the employment ratio
Q# 12 Consider an economy that produces only three types of fruit: apples, oranges & bananas.
(4)
In the base year the production & price data are as follows:
Fruit Quantity Price
Apples 3000 Unit Rs. 2 per unit
Bananas 6000 Unit Rs. 3 per unit
Oranges 8000 Unit Rs. 4 per unit

In the current year the production & price data are as follows:
Fruit Quantity Price
Apples 4000 Unit Rs. 3 per unit
Bananas 14,000 Unit Rs. 2 per unit
Oranges 32,000 Unit Rs. 5 per unit

a) Find nominal GDP in the current year & in the base year. What is the percentage increase since base
year? 7
b) Find real GDP in the current year & in the base year. By what percentage does a real GDP increase from
the base year to current year?
c) Find the GDP deflator for the current year & the base year. By what percentage does the price level
change from the base year to current year?