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ACKNOWLEDGEMENT
It is really much pleasure for me to prepare project report on Calculation of GDP, CPI & Inflation. At this stage while persuing my MBA I feel highly priviledge to work on this topic. I take this opportunity to express my profound gratitude and deep regards to my guide (Prof: Rahim Munshi Sir) for his exemplary guidance, monitoring and constant encouragement .The blessing, help and guidance given by him time to time shall carry me a long way in the journey of life on which I am about to embark.
Table Of Content
1) Introduction 2) Gross Domestic Product 3) Inflation 4) Consumer Price Index 5) Calculation of GDP 6) Calculation of Inflation 7) Calculation of CPI
INTRODUCTION
Economics was formerly called political economy. The term Political economy means the management of the wealth of the state. Adam Smith, the father of modern Economics, in his book entitled 'An Enquiry into the Nature and Causes of the Wealth of Nations (Published in 1776) defined Economics as a study of wealth. Smith considered the acquisition of wealth as the main objective of human activity. According to him the subject matter of Economics is the study of how wealth is produced and consumed.In this project I have explained brief information about GDP,CPI & Inflation and their Calculation.
company.Government spending - G is the sum of expenditure on final goods and services in concerned salaries weapons for military etc.
Government spending G is the sum of expenditure on final goods and services. In concerned salaries weapons for military etc. Examples of government spending-Weapons,Salaries& Etc.
Net exports (X-M) (x-m) is gross exports. Include goods and services.
INFLATION
LAYMAN-Rise in price TECHNICAL-It is a rise in the general price level caused by an imbalance between the quantity of money and trade needs. The word "inflation" originally applied solely to the quantity of money. It meant that the volume of money was inflated, blown up, overextended.
Causes of Inflation 1) Demand pull inflation (ex: petrol) 2) Cost push inflation (ex: cement) 3) Over- Expansion of Money Supply 4) Increase in Population 5) Expansion of Bank Credit 6) Black Money 7) Poor Performance of Farm Sector
Calculation of GDP
1) Expenditure Approach
Personal Consumption-5000000 Gross Investment-1000000 Government Consumption-2000000 Net exports-3000000 Net Population-10000000
Formula
GDP = personal consumption + gross investment + government consumption + net exports of goods and services
Employees Compensation-500000 Proprietor Income-1000000 Rents-12000 Corporate Profit-120000 Interest Income-100000 Indirect business taxex-10000 Deprication-50000 Net income of foreigner-500000 Net Population-1000000
GNP (Gross National Product) = employee compensation + proprietors' income + rents + corporate profits + interest income
= 500000+1000000+12000+120000+100000 =1732000
= 1732000+10000+50000+500000 = 2292000
Calculation of Inflation
Formula for calculation of Inflation New price Old price * 100 Old price
75-70/70*100=7.14%
Calculation of CPI
FORMULA USED FOR CPI Laspeyre's formula as given below is being used for the computation of CPI. (Pn/Po) x wi In = --------------------wi Where: In = CPI for the nth period Pn = price of an item in the in the nth period Po = price of an item in the base period wi = weight of the ith item in the base period = Po x qo / Po x Qo wi = Total weight of all items x 100