Determine value of marginal propensity to consume is implicit
1. Provide a summary of the economic performance of the country – in the Table below.
| GDP | |||||
| 2006 | 2011 | 2016 | 2021 | ||
| WITHOUTINVESTMENT | Nominal GDP | ||||
| GDP Deflator | |||||
| Real (2016 prices) | |||||
| WITH INVESTMENT | A | Real (2016 prices) | |||
| B | Real (2016 prices) | ||||
2. Which proposal will you recommend?
3. Can you make a recommendation about the proposals on the basis of GDP Deflators?
4. Will your recommendation (as in Question 2) change if Proposal B results in hyperinflation?
5. How much investment (expressed in 2011 dollars) will be needed in (currently investment is $30bn, expressed in 2011 prices) in order to make Proposal A better than Proposal B?
6. How much investment (expressed in 2011 dollars) will be needed in (currently investment is $30bn, expressed in 2011 prices) in order to make Proposal B better than Proposal A?
7. What value of ‘Marginal Propensity to Consume’is implicit in your calculations for proposal B?
8. Is the proposal, in this assignment, to invest in infrastructure based on Keynesian or Neoclassical reasoning?
9. What annual rate of inflation is implicit in your calculations for the period 2011-2016?
