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ECO205: (National Economy and Growth) Analyse what happens when the government changes the taxation system to offer greater incentives for saving.

ECO205: (National Economy and Growth) Analyse what happens when the government changes the taxation system to offer greater incentives for saving.

Module / Subject / School:

ECO205: National Economy and Growth

Singapore University of Social Sciences (SUSS)

Requirements: 

Discuss how Alex marriage to Maria affected the country’s Gross Domestic product.

(23 marks)

(b) Consider a closed economy with only two products: beer and pizza. The quantities and prices for a three-year period is shown at the below table.

Requirement:

  • Calculate nominal GDP in 2020, 2021 and 2022.
  • Using 2020 as the base year, calculate real GDP in 2020, 2021 and 2022.
  • Calculate the GDP deflator for 2020, 2021 and 2022.
  • Illustrate and discuss the similarities and differences between the GDP deflator and the CPI index.

(47 marks)

What we score:

80%

Our Writer’s Comment 

This assignment is designed to assess students’ understanding of business practices.

To secure an A+ grade, adhere to these guidelines and make sure your work aligns with the grading criteria:

Part (a): Impact of Marriage on GDP (23 marks)

This section is more conceptual, so it’s important to think critically about how marriage can affect GDP. Start by considering what GDP measures—specifically, the value of all goods and services produced in a country. Then, discuss how Alex’s marriage to Maria could influence factors like consumption, investment, and government spending.

For example, if Alex and Maria spend on a wedding, home, or other consumer goods, that will likely increase consumption, which is a component of GDP. If their marriage leads to family formation, they may purchase a house, which counts as investment spending. You could also consider indirect effects, such as how marriage might affect labor force participation or productivity. Be sure to make these connections clear and back them up with logic or examples.

Part (b): Calculating Nominal and Real GDP, and the GDP Deflator (47 marks)

Here’s where the math comes in. You’ll need to show that you understand how to calculate both nominal GDP and real GDP, as well as the GDP deflator. Follow these steps:

  1. Nominal GDP: This is the GDP calculated using current prices for each year. To get this, multiply the quantity of each product by its price for each year, then sum the results for beer and pizza. Repeat this process for 2020, 2021, and 2022.
  2. Real GDP: For real GDP, you’ll use 2020 as the base year, which means you’ll calculate GDP for all years using 2020 prices. Again, multiply the quantity of each product by the base year’s price and sum the results. This gives you the real GDP for each year.
  3. GDP Deflator: The GDP deflator is a measure of inflation and is calculated by dividing nominal GDP by real GDP and multiplying by 100. You’ll need to calculate this for each year to compare how prices have changed relative to the base year.

Step-by-Step Calculations

When calculating, ensure that you present your work clearly. Show the formula you’re using for each step and include all your calculations, as this will help the examiner follow your thought process and ensure you get full marks for the correct answers.

Part (b) Discussion: GDP Deflator vs. CPI

Once you’ve calculated the GDP deflator, compare it to the Consumer Price Index (CPI). Both measure price changes, but the GDP deflator reflects the prices of all goods and services produced domestically, while CPI reflects the prices of a specific basket of consumer goods and services. Discuss these differences and highlight any similarities, such as both being used to track inflation.

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