MACROECONOMICS

Question 1 (30 marks)
Visit the following data source from World Bank:
http://databank.worldbank.org/data/reports.aspx?source=2&series=NY.GDP.MKTP.CD&country
Select a combination of countries under developed country category (with GDP/capita of >US$12.000) and developing country category (with GDP/capita of <US$12.000).
The number of your group members will determine how many countries you will analyse (4 members=4 unique countries, 5 members=5 unique countries, and answer the following:
a. Collect data for the selected countries: Nominal GDP, Real GDP, GDP per capita, GDP growth, and unemployment from 2008 to 2018 (or up to the most recent year where data is available). Present data in both tables and graphs. Show your data source. All monetary data should be in current USD not LCU.
b. Based on the data that you have collected, compare and contrast the GDP growth of the developed and the developing countries that you have selected during the years covered in your analysis. Which country/ies has a higher growth rate? Relate this to the concept of “catch-up” effect (also known as Economic Convergence) and evaluate whether it holds true or not in reality. Make sure to link your discussions to the production factors (Natural resources, Labour, Physical and Human capital, and Technology) and use it to compare and contrast the differences in the growth of the developed and developing countries you are evaluating. The use of references and further data are necessary to strengthen your arguments and findings.
c. Identify 2 factors (C, I, G, NX) that has developed the most for each country and assess theseover the time period of your observations (2008-2018) using actual data and references. Investigate what drove the growth of these factors and how it contributed to each of the country’s growth.
d. According to the Unemploymentdata collected:

1. Calculate the Natural Unemployment Rate for each of the country you have used for your analyses.
2. Based on your observations across the different countries, select the year where unemployment peaked in each of the respective economies. Relate to actual events on that specific year which may have caused/contributed/influenced the surge of unemployment in each of the countries you have presented.
3. Investigate what type of unemployment that was most prevalent in the economy you are evaluating during its peak year of unemployment. Ensure that relevant data are presented.
4. List 2 examples of supports provided by the government of the specific economies you have evaluated. Assess the impacts whether the supports provided have been successful or not, which needs to be presented with evidence.

Question two (10 marks)
a. From the countries you have evaluated, select a country from the developing and developed country cohort and analyse the following by using data from their respective central banks:

1. Investigate what reserve requirement ratio is imposed by the central bank. Calculate the money multiplier for each country.
2. What is the likely impact of (1) to the state of the country’s banking system? Provide a clear, real life example to demonstrate your point.

Sample Solution