Mgt411 Money and Banking solution

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Question 01
Part A
Calculate consumer price index and inflation rate by using following data. (Marks 4)
Years
Cost of Basket
CPI Inflation
Rate
2006
2000
100
n.a
2007
2300
115
15%
2008
2850
142.5
23.91%





Part B
Calculate GDP deflator and inflation rate by using following data. (Marks 4)
Years
Nominal GDP
Real GDP
GDP deflator
Inflation Rate
2006
78000
78000
100.0
n.a
2007
82000
80000
102.5
2.5%
2008
89000
85000
104.7
2.146%


Part C
Which of the following accounts will include in M1 & M2? Identify separately.(Marks 2)
• Euro dollars
• Current account balances in Pakistan
• ATM cards balances in Pakistan
• Banks Saving accounts in Pakistan
• Individual money market mutual fund
• Institutional money market mutual fund share

M1:
Euro dollars
Current account balances in Pakistan
ATM cards balances in Pakistan
M2:
Individual money market mutual fund
Banks saving accounts in Pakistan
Institutional money market mutual fund share

Question 02

Part A
An investor deposits Rs.100,000 today in a bank and bank offers 5% interest rate per annum compounded quarterly. What will be the amount after 10 years? (Marks 5)


Part B
A student needs Rs 200,000 after 5 year for his study. What amount he has to deposit in a bank today so that he will have Rs 200,000 after 5 years if bank offers yearly 6% interest rate compounded semi-annually. (Marks 5)


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