What is the percentage increase in the cost of basket

Assignment Help Macroeconomics

Reference no: EM131390306

Assignment

Problem 1

The Government of a given economy has to decide about the allocation of the budget of 2017.

(Budget :1 000 000 $)

Different studies evaluated the cost and benefits of several projects :

- Building a new free Zone : Cost : 300000, Revenues : 700000
- Producing Aluminum : Cost : 150000, Revenues : 350000
- Investing the budget in the financial system : 5% interest rate

The final decision of the government is to build the Free Zone

1. Calculate accounting costs
2. Calculate opportunity costs
3. Calculate Economic Cost
4. Calculate Economic profits
5. Calculate your Economic profits

Problem 2

The following table shows for 2000 and 2016 the cost of a basket of goods and the nominal average wage:

	2000	2016
Salary	1000	1250
Cost of basket	70	94.5
Real salary

1. Calculate the real income in 2000 and in 2016
2. What is the percentage increase in the cost of basket
3. What is the percentage increase in the salary (nominal)
4. Calculate the salary in 2016 that maintain the purchasing power of 2000.

Reference no: EM131390306

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