Macro Workshop FTU [PDF]

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MACROECONOMICS WORKSHOP Introductory Economics for 2023 BBA/BFA Foundation Year Student Group number: …………………………………………………………………………

Assigned Country : -

Vietnam for all groups Czech Republic, Japan, UK, US, Germany, Canada, Singapore, Brasil, Australia, Belgium, Finland, Sweden (For example, group 1 is assigned to Czech Republic, group 2 is assigned to Japan,…)

This take-home Assignment is meant to replace an ordinary onsite examination which would otherwise be organized if not for the outbreak of the covid pandemic. To complete the examination, you will need Microsoft Excel for the purpose of graphing. Each bank carries one point, each graph carries 5 points. A short essay of 300 words carries 7 points. Students answering all questions will earn 100 points. Question 1: With this question, please visit the World Economic Outlook Database April 2021 (https://www.imf.org/en/Publications/WEO/weo-database/2021/April) to collect the relevant data of the assigned country. Please note the terminology: real GDP is also called GDP at constant price; nominal GDP is also current GDP. 25,000

8 6

20,000

4 15,000

2 0

10,000

-2 5,000

0 1980

-4

1985

1990

1995 Real GDP

F

2000

2005

2010

GDP Growth Rate (right)

2015

2020

-6

GDP is defined as the total market value of all final goods and services produced within a country in a given period of time. The three approaches to measure GDP are: -

…………………………………………………….. (1) …………………………………………………….. (2) …………………………………………………….. (3)

a) Figure 1 illustrates the levels of GDP and its growth rate for the United States. Produce the same graph for your assigned country and use the information thereof to answer the following questions: (insert your graph here) - The level of real GDP in 2000 was …………………………..(4). The level of real GDP in 2021 is projected to be …………………………………….. (5). Total real GDP of this country has increased by ………………………………….. (6) % in the last 20 years. 25,000

140 120

20,000 100 15,000

80 60

10,000

40 5,000 20 0 1980

1985

1990

1995

2000

Nominal GDP (National Currency)

2005

2010

2015

2020

0

GDP Deflator (right)

F The average growth rate in the last 20 years has been ………………………… (7). If this growth rate sustains, the level of GDP of your assigned country will be doubled in ……………………………… (8) years.

b) Figure 2 presents the data on Nominal GDP and GDP deflator for the United States. Produce the same graph for your assigned country and answer the following questions: (insert your graph here) - The level of nominal GDP in 2000 was …………………………..(9). The level of nominal GDP in 2021 is projected to be …………………………………….. (10). Total nominal GDP of this country has increased by ………………………………….. (11) % in the last 20 years. Nominal GDP for your assigned country has grown faster than real GDP. The reason for this difference is ………………………………… (12). The GDP deflator of your assigned country was ………………….. (13) in 2000. In 2021 it is projected to be ……………………………….(14). The price level has increased ……………………………… (15) % in the last 20 years. This question is based on the GDP deflator. If a person earned 1 million income in national currency in 2000, that income in 2021 price is …………………………………….. (16). If a person earns 1 million of income in national currency in 2021, this income in 2000 price level is……………………………(17). 16 14 12 10 8 6 4 2 0 -2 1980

1985

1990

1995 Inflation (GDP Deflator )

F

2000

2005 Inflation (CPI period average)

2010

2015

2020

c) Figure 3 presents the inflation rates for the United States. Produce the same graph for your assigned country and use the information thereof answer the following questions: (insert your graph here) CPI and GDP deflator inflation rates in 2009 were …………………… (18) and ……………………. (19). Three reasons for the difference is (no more than 20 words for each point): o ………………………………………………………………. (20) o ………………………………………………………………. (21) o ………………………………………………………………. (22) This question is based on the CPI measure of inflation. If a person needed 1 million in national currency in 2000 to support his living, that expenditure in 2021 price is …………………………………….. (23). If a person needs 1 million in national currency to support his/her living in 2021, this expenditure in 2000 price level costs…………………………… (24). 65,000 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 1980

1985

1990

1995

2000

2005

2010

2015

2020

F

d) Figure 4 presents the level of GDP per capita in constant national currency for the United States. Produce the same graph for your assigned country and answer the following question: (insert your graph here)

The living standard standards in the United States has increased 19.99% between 2000 and 2020. The increase in GDP per capita in your assigned country in the same period was ………………………….. (25). As discussed in the book by Mankiw, the factors determining productivity (and thus the standard of living) are: o …………………………………………. (26). o …………………………………………. (27). o ………………………………………… (28). o …………………………………………… (29). o ………………………………………… (30). e) In no more than 300 words, describe one or two outstanding facts about economic development of your assigned country in the last 40 years (7 points). ……………………………………………………………………………………………………… ………………………………………………………… (31). Question 2: With this question, please visit the World Development Indicator Database (https://databank.worldbank.org/source/world-development-indicators) and download the following data for the year 2015. i. ii. iii. iv. v. vi. vii.

GDP per capita (current US$) Literacy rate, adult total (% of people ages 15 and above) Life expectancy at birth, total (years) Lifetime risk of maternal death (%) Mortality rate, infant (per 1,000 live births) School enrollment, primary (% gross) People using safely managed drinking water services (% of population) a) In 2015, the value of the above variables of your assigned country is: GDP per capita (current US$): …………………… (32) Literacy rate, adult total (% of people ages 15 and above): …………………… (33) Life expectancy at birth, total (years): …………………… (34) Lifetime risk of maternal death (%): …………………… (35) Mortality rate, infant (per 1,000 live births): …………………… (36) School enrollment, primary (% gross): …………………… (37) People using safely managed drinking water services (% of population): …………………… (38)

b) Figure 5 present the scatter plot relating GDP per capita (horizontal axis) with life expectancy (vertical axis). A trend line (and the underlying equation) is also added to highlight the relationship between the two variables. A call-out is inserted to indicate the point showing GDP per capita and Life expectancy of the world. Produce the same graph and indicate the point representing your assigned country. 90 85

f(x) = 4.64786291789535 ln(x) + 31.3554591993522

80 75 70

Whole World [X VALUE]; [Y VALUE]

65 60 55 50 45

0

0 00 0 2

0 00 0 4

0 00 0 6

0 0 0 0 0 0 00 00 00 00 00 00 0 0 0 0 0 0 8 10 12 14 16 18

Figure 5. GDP per capita vs. Life expectancy (insert your graph here) In terms of Life expectancy, given the level of income per capita, your assigned country did better or worse relative to the estimated trend line? …………………………. (39) (please choose better/worse). c) Create a scatter plot showing the relationship between GDP per capita and the Literacy rate. On this graph, impose a suitable trend line approximating the relationship, please also display the underlying equation. Finally, please inserted a call-out with the information from your assigned country. (insert your graph here) In terms of Literacy rate, given the level of income per capita, your assigned country did better or worse relative to the estimated trend line? …………………………. (40) (please choose better/worse). d) Create a scatter plot showing the relationship between GDP per capita and the Risk of maternal death. On this graph, impose a suitable trend line approximating the relationship, please also display the underlying equation. Finally, please inserted a call-out with the information from your assigned country. (insert your graph here)

In terms of Risk of maternal death, given the level of income per capita, your assigned country did better or worse relative to the estimated trend line? …………………………. (41) (please choose better/worse). e) Create a scatter plot showing the relationship between GDP per capita and the Safely managed drinking water. On this graph, impose a suitable trend line approximating the relationship, please also display the underlying equation. Finally, please inserted a call-out with the information from your assigned country. (insert your graph here) In terms of Safely managed drinking water, given the level of income per capita, your assigned country did better or worse relative to the estimated trend line? …………………………. (42) (please choose better/worse). f) Create a scatter plot showing the relationship between GDP per capita and the School enrollment. On this graph, impose a suitable trend line approximating the relationship, please also display the underlying equation. Finally, please inserted a call-out with the information from your assigned country. (insert your graph here) In terms of School enrollment, given the level of income per capita, your assigned country did better or worse relative to the estimated trend line? …………………………. (43) (please choose better/worse). g) Create a scatter plot showing the relationship between GDP per capita and the Mortality rate. On this graph, impose a suitable trend line approximating the relationship, please also display the underlying equation. Finally, please inserted a call-out with the information from your assigned country. (insert your graph here) In terms of Mortality rate, given the level of income per capita, your assigned country did better or worse relative to the estimated trend line? …………………………. (44) (please choose better/worse).