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Homework answers / question archive / Discuss the reason(s) behind dividing the project into three phases ( why not all of the in one phase) ?
Discuss the reason(s) behind dividing the project into three phases ( why not all of the in one phase) ?
. LO 3 In year 1 and year 2, there are two prod- ucts produced in a given economy, smartphones and earphones. Suppose that there are no inter- mediate goods. In year 1, 4,000 smartphones
and 2,000 earphones are produced and sold at $2,000 and $200 each, respectively. However, due to an earthquake in year 2, some production lines are destroyed and the production of smart- phones and earphones falls to 1,000 and 1,500 units, respectively. However, the price of each pair of smartphone doubled and the price of each pair of earphones increased to $300. (a) Calculate nominal GDP for year 1 and year 2. (b) Calculate real GDP in each year and the percentage change in real GDP from year 1 to year 2 using year 1 as the base year. Next, do the same calculations using the chain- weighting method (c) Calculate the implicit GDP price deflator and the percentage inflation rate from year 1 to year 2 using year 1 as the base year. Next, do the same calculations using the chain- weighting method. (d) Suppose that the design and quality of smart- phones improved significantly in year 2. For example, the battery life of smartphones in year 2 was twice as long in year 1. Discuss
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Answer - the reason(s) behind dividing the project into three or more phases ( why not all of the in one phase) are as follows -
Dividing the project into phases helps to make it possible to proceed it in the perfect and accurate direction. Through dividing the project into phases, the whole work load of a given project is split into smaller components, and that making it much easier to monitor. Through dividing a project into phases, an organisation can easily plan and assess the activities of given project and also an organisation can perfectly ensure that sufficient attention is devoted to the planning and initial stages of a given project. Initiation, planning, implementation, closure etc are the important phases of any project.
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NOMINAL GDP:-
WHEN GDP IS CALCULATED ON THE BASIS OF CURRENT YEAR PRICE IT IS CALLED AS NOMINAL GDP.
1) NOMINAL GDP FOR THE YEAR 1
PRICE OF GOOD A IN THE YEAR 1 X QUANTITY OF GOOD A IN YEAR 1 + PRICE OF GOOD B IN THE YEAR 1 X QUANTITY OF GOOD B IN YEAR 1
=2000X4000+200X2000 = 8,000,000+400,000 = $8,400,000
THEREFORE NOMINAL GDP FOR YEAR 1 = $8,400,000
NOMINAL GDP FOR YEAR 2
PRICE OF GOOD A IN YEAR 2 X QUANTITY OF GOOD A IN YEAR 2+ PRICE OF GOOD B IN YEAR 2 X QUANTITY OF GOOD B IN YEAR 2
= 4000X1000+300X1500 = 4,000,000+450,000 = $4,450,000
2. REAL GDP:
WHEN GDP IS CALCULATED USING BASE YEAR PRICE WE GET REAL GDP.
REAL GDP YEAR 1:
PRICE OF GOOD A IN YEAR 1 X QUANTITY OF GOOD A IN YEAR 1+ PRICE OF GOOD B IN YEAR 1 X QUANTITY OF GOOD B IN YEAR 1
=2000X4000+200X2000 = 8,000,000+400,000 = $8,400,000
THEREFORE REAL GDP FOR YEAR 1 = $8,400,000
REAL GDP YEAR 2:
QUANTITY OF GOOD A IN YEAR 2 X PRICE OF GOOD A IN YEAR1 + QUANTITY OF GOOD B IN YEAR 2 X PRICE OF YEAR 1
= 1000 X 2000+1500X 200 = 2,000,000+ 300,000 = $2,300,000
PERCENTAGE CHANGE IN YEAR1 TO YEAR 2:
NOMINAL GDP - REAL GDP X 100 = 8,400,000 - 2,300,000 X100 = 265%
REAL GDP 2,300,000
CHAIN WEIGHTED METHOD:
YEAR 1 QUANTITIES AT YEAR 1 PRICES = $8,400,000
YEAR 2 QUANTITIES AT YEAR 1 PRICES = $2,300,000
GROWTH RATE OF GDP WITH YEAR 1 PRICES =8,400,000-2,300,000/2,300,000 X 100 = 265%
