Order Description

Please use answer sheet to answer question

MUST BE hand writing answer, please show the process and calculations in the answer, DO NOT ONLY write a number

Name :

Student #:

49003 ECONOMIC EVALUATION

Assignment #1 (Spring 2016)

ANSWER-SHEET

1. Provide a summary of the economic performance of the country – in the Table below.

(5 Marks)

(in billion dollars)2006201120162021Nominal GDPGDP DeflatorReal (2021 prices) AReal (

2021 prices)BReal (

2021 prices)GDPWITHOUT INVESTMENTWITH INVESTMENT

Notes:

1) 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 the two the proposals are compared in terms of Real GDPs (in 2016 prices) instead of Real GDPs (2021 prices)? (2 Marks)

Yes No

Why? Because _____________________________________________________________

____________________________________________________ (no more than 10 words)

Assignment 1-S16-Template

4. Will your recommendation (as in Question 2) change if, the investment in Proposal B, results in the corporate sector making a profit of $100bn in 2021, instead of a loss of $200bn (as results in hyper-inflation? (2 Marks)

Yes No

Why? Because _____________________________________________________________

____________________________________________________(no more than 10 words)

5. What value of investment, expressed in 2021 dollars (currently investment is $40bn, in 2011 dollars) will Proposal A become worthy of recommendation? (2Marks)

$bn

Please present your calculations here (no more than two steps of calculations).

6. Will your recommendation change if investment in Proposal A produces hyperinflation, resulting in a GDP deflator of 1000 in 2021; while investment in Proposal B produces deflation, resulting in a GDP deflator of 10 in the year 2021? (2 Marks)

Yes No

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 (no more than two steps of calculations).

Assignment 1-S16-Template

8. Is the proposal, in this assignment, to invest in infrastructure based on Keynesian or Neo-classical reasoning? (2 Marks)

Keynesian Neo-classical Either Neither

Please provide reasoning in support of your answer

_________________________________________________________________________

____________________________________________________(no more than 10 words)

9. What annual rate of inflation is implicit in your calculations for the period 2006-2021? (2 Marks)

Percent

Please present your calculations here (no more than two steps of calculations).

10. Will your recommendation change if, for Proposal A, people saved every dollar of the yearly increase in their incomes? (2 Marks)

Yes No

Why? Because _____________________________________________________________

____________________________________________________(no more than 10 words)

In addition to the above, upto 2 marks could be awarded for neatly organized and typed annexure.

Assignment 1-S16-Template