Is India a rich nation or a poor nation? based upon it's macroeconomic statistics, would you say India is performing better, worse, or same as a comparable nation? what would be an appropriate nation for comparison? explain. what are the most critical factors about India which explain its relative wealth or poverty?

| April 29, 2015

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NUMBER ONE {75 points}. Consider the macroeconomic data provided below.  Describe the state of the macroeconomy in terms of the business cycle for the period from 2003 to 2005.  Note that GDP is stated in nominal terms, not in real terms.  [Sources: bls.gov and bea.gov.]

 

Year                GDP                GDP                UNEMP          INFLATION

(trillions)          growth             rate                  rate

Rate                                         (change in CPI-U)

2002                $10.47             –                       5.7%                1.60%

2003                $10.97             ?                      6.0%                2.28%

2004                $11.73             ?                      5.5%                2.66%

2005                $12.49             ?                      5.1%                3.38%

 

 

NUMBER TWO {75 points}.  Comment on the current unemployment situation in the U.S.  What does the unemployment figure tell us about where the U.S. economy is in the business cycle?  Explain.  What does the movement in the unemployment rate from the previous monthly figure tell us about where the economy is going in the business cycle?  Explain.  Are deeper and more meaningful measures of labor market conditions necessary in order to comment more effectively on macroeconomic performance?

 

 

 

NUMBER THREE {75 points}.  Is India a rich nation or a poor nation?  Based upon it’s macroeconomic statistics, would you say India is performing better, worse, or same as a comparable nation?  What would be an appropriate nation for comparison?  Explain.  What are the key elements in the natural resource endowment and in the social-political-economic institutions which explain the macroeconomic position of India and of the performance of India’s macroeconomy?

 

ECONOMIC STATISTICS FOR INDIA (2014 est)

 

total GDP (in Purchasing Power Parity) = $7,277 b.    – – – ranked 4th largest in the world (out of 230 nations ranked)

(up from $6,889 b. in 2013)

 

GDP per capita = $5,800     – – – ranked 160th highest in world (160 out of total of 230 nations)

(up from $5,500 in 2013)

 

real GDP growth rate = +5.6%    – – – ranked 43rd highest in world (out of 222 nations)

(up from +5.0% in 2013)

 

Unemployment Rate = 8.6%    – – – ranked 97th lowest in world (out of 204 nations)

(down from 9.1% in 2013)

 

Inflation Rate = 8.0%        – – – no ranking available

(down from 10.0% in 2013)

 

Distribution of family income – Gini index = 36.8 (in 2004) – – – ranked 79th most unequal in the world (out of 141 nations)

(down from 37.8 in 1997)

 

Government Budget surplus (+) or deficit (-) =

-5.0% of GDP  – – –  ranked 167th lowest surplus out of 215 nations)

{note: revenues of $185.7 b. minus expenditures of $288.8 b. = deficit of $103.1 b.}

 

Public Debt = 51.3% of GDP    – – –  ranked 67th highest in world (out of 164 nations)

(down from 51.4% in 2013)

 

Exports = $342.5 b.        – – – ranked 19th largest in world (out of 223 nations)

(up from $319.7 b. in 2013)

 

Imports = $508.1 b.        – – – ranked 10th largest in world (out of 223 nations)

(up from $482.3 b. in 2013)

 

Population below poverty line = 29.8% (in 2010)

poverty line standard is set by Indian government

 

[source: CIA WORLD FACTBOOK: www.cia.gov]

 

worldwide median values in 2014:

 

total GDP (in Purchasing Power Parity) = $34.48 b. (Laos – – – ranked 116th largest out of 230 nations)

 

GDP per capita = $12,700  (South Africa – – – ranked 115th highest out of 230 nations)

 

real GDP growth rate = +3.0% (Jordan – – – ranked 112th highest out of 222 nations)

 

Unemployment Rate = 8.8% (Ukraine – – – ranked 103rd lowest out of 204 nations)

 

Inflation Rate =  no ranking available

 

Distribution of family income –

Gini index = 38.0 (Serbia in 2013 – – – ranked 71st most unequal out of 141 nations)

 

Government Budget surplus (+) or deficit (-) = -2.8% of GDP (United States of America – – –  ranked 108th lowest surplus out of 215 nations)

{note: revenues of $3,029 b. minus expenditures of $3,520 b. = deficit of $491 b.}

 

Public Debt = 44.3% of GDP (Honduras – – –  ranked 83rd highest out of 164 nations)

 

Exports = $5.67 b. (Cuba  – – – ranked 112th largest out of 223 nations)

 

Imports = $8.081 b. (Zambia – – – ranked 111th largest out of 223 nations)

 

 

NUMBER FOUR {75 points}.  The oldest formal statistical metric of macroeconomic performance is GNP, Gross National Product, which was first measured and published for the year 1933.  We now prefer GDP, Gross Domestic Product.  Citation of figures for GDP, GDP per capita, and GDP growth rates are now a matter of routine in the culture of journalistic reporting on society.  Discuss the use of such national income accounting metrics as GDP as measures of social well-being.  Is GDP a useful and accurate guide to the attempt to quantify the welfare of society in the aggregate?  Explain.  Is the question, “Would you rather live in a country with a high GDP growth rate or a low GDP growth rate?” merely rhetorical?

{Hint: consider a thoughtful reference to concepts and references presented in:

Fleurbaey, Marc [2009], “Beyond GDP: The Quest for a Measure of Social Welfare,” Journal of Economic Literature 47, 1029-1075.  http://www.jstor.org/stable/pdfplus/40651532.pdf?acceptTC=true}

 

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Category: Economics

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