CCBMDO BUSINESS ECONOMICS II

ASSIGNMENT 1

Instructions

This is a group assignment. Each group needs to turn in only one assignment. All graphs
should be accompanied by a table showing the data which was plotted in the graph.
Assignments should be printed out on A4 paper (hand written assignments are not allowed)
and turned in during class on Tuesday March 8, 2011.

1. From the data files given, find the annual growth rate of GDP at factor cost at 1999-2000
prices (real GDP) for each year from 1950-51 to 2008-09. Plot the annual growth rates
on a graph. The X axis should have years, and the Y axis should have year on year growth
rate.
2. Look at the performance of annual growth rates of real GDP over the periods (1) 1950-
51 to 1979-80, (2) 1980-81 to 1990-91, and (3) 1991-92 to 2009-10. Calculate the
average annual growth rate of real GDP for each of these periods. What difference do
you notice in the average annual growth rates of real GDP between these periods? Why
do you think these differences occurred?
3. For the period 1993-94 to 2008-09, find the annual growth rates of GDP at factor cost at
current prices (nominal GDP). Calculate the difference between the growth rates of real
GDP and nominal GDP for each year from 1993-94 to 2008-09.
4. For the period 1993-94 to 2008-09, calculate the annual WPI inflation rate for all
commodities. Subtract the annual WPI inflation rate from the annual growth rate of
nominal GDP. Are the numbers similar to the numbers for annual growth rate of real
GDP? Why should the numbers be similar?
5. For the period 1993-94 to 2008-09, on the same graph, plot the annual WPI inflation
rate and the annual growth rate of real GDP. What do you notice about the behavior of
these two rates?
6. For the period 1993-94 to 2008-09, on the same graph, plot the annual WPI inflation
rate, the annual CPI (IW) inflation rate, and the GDP deflator. What do you notice about
the behavior of inflation as measured by these different measures? Why do you think
these differences arise?
a. For the CPI (IW) series, use the “Average” figures from the last table on page 1
and the first table on page 2. For the years 2006 to 2010, multiply the “Average
values” by 4.58
7. For the period 1993-94 to 2008-09, on the same graph, calculate and plot the annual
WPI inflation rate for: (1) all commodities, (2) primary articles, (3) fuel, power, light and
lubricants, and (4) manufactured products. Which of (2), (3), and (4) is the most volatile

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over this period (measure volatility by standard deviation of the annual inflation rate
over the period 1993-94 to 2008-09? For which of (2), (3) and (4) was the average
annual inflation rate over the period 1993-94 to 2008-09 the highest? Which of (2), (3)
and (4) grew slowest / declined during the 2008-09 recession?