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49003 ECONOMIC EVALUATION
Assignment #1 (Autumn 2018)
ANSWER-SHEET
1. Provide a summary of the economic performance of the country – in the Table below.
(5 Marks)
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GDP (in billion dollars) |
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2008 |
2013 |
2018 |
2023 |
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WITHOUT INVESTMENT |
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Nominal GDP |
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GDP Deflator |
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Real (2018 prices) |
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WITH INVESTMENT |
A |
Real (2018 prices) |
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B |
Real (2018 prices) |
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Notes:
1) Base year for GDP Deflators is 2013.
2) All entries in this table must be rounded-off to the nearest zeros, i.e., no decimal points.
2. Which proposal will you recommend? (2 Marks)
A B Either Neither
Why? Because ___________________________________________________________
____________________________________________________ (no more than 10 words)
3. Will your recommendation change if Proposal A results in hyper-inflation? (2 Marks)
Yes No
Why? Because _____________________________________________________________
____________________________________________________(no more than 10 words)
4. Which proposal will you recommend on the basis of GDP deflators? (2 Marks)
Yes No
Why? Because _____________________________________________________________
____________________________________________________(no more than 10 words)
5. Will your recommendation change if 2023 is used as the base year for determining Real GDPs instead of 2018 (as is presently the case)? (2 Marks)
Yes No
Why? Because _____________________________________________________________
____________________________________________________(no more than 10 words)
6. How much investment (expressed in 2018 dollars) will be needed in (currently investment is $30bn, expressed in 2013 prices) in order to make Proposal A better than Proposal B?
(2 Marks)
$42bn
$58bn
$73bn
None of the above
Why? Because _____________________________________________________________
____________________________________________________(no more than 10 words)
7. What value of ‘Marginal Propensity to Consume’ is implicit in your calculations for proposal B? (2 Marks)
Please present your calculations here (just two steps of calculations)?
8. Is the proposal, in this assignment, to invest in infrastructure based on Keynesian or Neo-classical reasoning? (2 Marks)
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Keynesian Neo-classical Either Neither
Why? Because _____________________________________________________________
____________________________________________________ (no more than 10 words)
9. Will you recommendation change if, say, due to unforeseen Global Financial Crises, the economy experiences a severe deflation and – as a result – the GDP Deflator for 2023 gets reduced to 10? (2 Marks)
Yes No
Why? Because ___________________________________________________________
____________________________________________________(no more than 10 words)
10. Will your recommendation change if, for Proposal A, people save every dollar of the yearly increase in their incomes as shown in Table 1 of the assignment? (2 Marks)
Yes No
Why? Because ____________________________________________________________
____________________________________________________(no more than 10 words)
In addition to the above, upto 2 marks could be awarded for succinct and cogent answers to various questions and for staying with the word/page limits.
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