MULUNGUSHI UNIVERSITY

DEPARTMENT OF ECONOMICS
INTRODUCTION TO MACROECONOMICS (SSE 122)
TUTORIAL SHEET ONE

1. What is Macroeconomics? How is it different from Microeconomics?

2. What are some of the aggregate components that Macroeconomics focuses on?
3. Briefly explain the concepts of Gross Domestic Product, Gross National Product and Net
National Product.
4. Mention some of the items not included in the measurement of GDP.
5. What are transfer payments? Give examples
6. What are the main methods that are used to measure GDP?
7. Outline the main problems associated with the measurement of GDP
8. Assuming Zambia only produces bicycles, laptops, televisions, radios and shoes. Suppose in the
year 2022 the country managed to produce 75 bicycles, 50 laptops, 100 TVs, 230 radios and 40
pairs of shoes.

(a) Calculate the GDP of Zambia in 2010 if the price per unit of these products where K50, K250,
K300, K100, and K35 respectively.
(b) If net factor income from abroad was K5000 and the value of capital consumption
(depreciation) was K1200, ceteris paribus, calculate the GNP and NNP respectively.

9. Assume the following to be macroeconomic data for Zambia in 2012

Imports K200, Wages K500, Consumption K1000, Rent K150, Exports K400, Government
Spending K500, Profits K250, Income earned by Zambians abroad K1300, Income earned by
foreigners in Zambia K1500, depreciation K200, Interest K300, Investment K700 and Indirect
business taxes K1000.

(a) Calculate by using the expenditure method (i) Gross Domestic Product, (ii) Gross National
Product and (iii) Net National Product.

(b) Calculate by using the Income Method (i) Gross Domestic Product, (ii) Gross National Product
and (iii) Net National Product.
10. Given the following to be macroeconomic data for Zambia in 2011

Household Consumption K10,001.3

Profits K8,097.3
Investment K1,589.20
Indirect business tax K1,001.10
Depreciation K1,861.10
Government spending K2,768.70
Net Foreign Factor income K146.20
Exports K960
Imports K1,346.4
wages K1,954.70
Rents K292.70
interest income K765.90

(a) Calculate by using the expenditure method (i) Gross Domestic Product, (ii) Gross National
Product and (iii) Net National Product.

(b) Calculate by using the Income Method (i) Gross Domestic Product, (ii) Gross National Product
and (iii) Net National Product.

11. A farmer grows and produces 50metric tonnes of maize and sells it to a miller for ZMW80.
The miller turns the maize to flour and then sells the flour to a baker for ZMW350. The baker uses
the flour to make bread and sells the bread to the final consumer for ZMW500.

a) What is the value added by each person?

b) What is the GDP contribution of this industry?

12. Explain what is meant by Real GDP and Nominal GDP

13. Suppose a hypothetical economy Zed produces only 3 goods; Maize Shirts and Pizza. Analyze
the table below and answer the questions that follow

2010 2018 2022

Product Quantity Price Quantity Price Quantity Price
Maize 100 50 110 60 125 72
Shirts 80 40 90 55 100 63
Pizza 90 10 115 15 130 21

a) Calculate the Real and Nominal GDP for the years 2010, 2018 and 2022 using 2010 as the
base year.
b) Calculate the GDP deflator for the years 2010, 2018 and 2022.