DETAILED RESPONSES TO SOME QUESTIONS ASKED DURING THE LECTURE 1.

Base Year:

Rebasing can be done more frequently. A minimum of five-year interval is advisable for rebasing. If rebasing were done separately from benchmarking exercise, it would be possible for countries to undertake more frequent rebasing without demanding detailed data or substantial resources. Ideally speaking, countries will plan on using annual rebasing and chain volume indices as recommended by or as per guidelines of United Nations Systems of National Accounts (UNSNA or SNA 2008 revised). In addition, the rebasing is a requirement of the government policy and decision makers, researchers and national and international users of Pakistan macro-economic data and it is also international practice. National accounts aggregates at constant prices provide important indicators for measuring growth in the activity or economy. All countries are compiling national accounts aggregates at current and constant prices. They also update the base year periodically. Constant price estimates use the price relatives of a particular year to weight together the volume components. Each base year gives a different perspective resulting from those weights. While constant price data have the advantage of being additive, over time the pattern of relative prices in the base period tends to become progressively less relevant. Therefore it is necessary to update the base period to adopt weights that are more consistent with current conditions. To present consistent time series the old series is required to be linked to the series based on the new base year, resulting in a set of chain linked time series. 2. Subsidy:

Subsidies are transfer payments to assist industries that benefit the public, but might not survive or remain stable if operated for profit without subsidies. Agriculture products, Electricity, and rail transportation are subsidized in most modern economies. 3. What is Economy or Economics? (I dont remember if the question was asked about economy or economics, anyway definitions are given below)

Economy: Activities related to the production and distribution of goods and services in a particular geographic region. Economics: Economics is the study of how people choose to use resources (allocation of resources). Resources include the time and talent people have available, the land, buildings, equipment, and other tools on hand, and the knowledge of how to combine them to create useful products and services. 4. Graph on slide no. 31:

The graph shows that nominal GDP rises faster than real GDP. This should make sense, because growth in nominal GDP is driven by growth in output AND by inflation. Growth in real GDP is driven only by growth in output. The two lines cross in the year 2000 (the base year for the real GDP data in this graph). This should make sense because real GDP equals nominal GDP in the base year. Before the base year, real GDP > nominal GDP. For example, in 1975, nominal GDP is about $3 billion, while real GDP is about $6 billion (in 2000 dollars). This should make sense because prices were so much higher in 2000 than in 1975, so using those high 2000 prices to value 1975 output would lead to a bigger result than valuing 1975 output using 1975 prices. Similarly, after 2000, nominal GDP is higher than real GDP because prices are higher in later years than they were in 2000.