Amity Campus Uttar Pradesh India 201303 ASSIGNMENTS PROGRAM: BFIA SEMESTER-II Subject Name: Study COUNTRY: Roll

Number (Reg. No.): Student Name: INSTRUCTIONS a) Students are required to submit all three assignment sets. ASSIGNMENT Assignment A Assignment B Assignment C b) c) d) e) DETAILS Five Subjective Questions Three Subjective Questions + Case Study Objective or one line Questions MARKS 10 10 10

Macro-Economics for Business

SOMALIA BFIA01512010-2013019 MOHAMED ABDULLAHI KHALAF

Total weight-age given to these assignments is 30%. OR 30 Marks All assignments are to be completed as typed in word/pdf. All questions are required to be attempted. All the three assignments are to be completed by due dates and need to be submitted for evaluation by Amity University. f) The students have to attach a scanned signature in the form.

Signature : __________________________

Date: 05 July 2011

( ) Tick mark in front of the assignments submitted Assignment A Assignment B Assignment C

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Macro-Economics for Business

Assignment A Five subjective questions (2*5 =10 marks) Q: 1). What do you understand by circular flow of income? Explain with the help of two sector model. Answer: In economics, the term circular flow of income or circular flow refers to a simple economic model which describes the reciprocal circulation of income between producers and consumers. The economy consists of millions of people engaged in many activities; buying, selling, working, hiring, manufacturing, and so on. To understand how the economy works, its useful to find some way to simplify these activities. In other words, we need a model that explains, in general terms, how the economy is organized and how participants in the economy interact with one another. This Figure presents a visual model of the Circular Flow Of Income. In this model, the economy has two types of decision makers; households and firms. Firms produce goods and services using inputs, such as labor, land, and capital (buildings and machines). These inputs are called the factors of production. Households own the factors of production and consume all the goods and services that the firms produce.

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Households and firms interact in two types of markets. In the markets for goods and services, households are buyers and firms are sellers. In particular, households buy the output of goods and services that firms produce. In the markets for the factors of production, households are sellers and firms are buyers. In these markets, households provide firms the inputs that the firms use to produce goods and services. The circular-flow diagram offers a simple way of organizing all the economic transactions that occur between households and firms in the economy. The inner loop of the circular-flow diagram represents the flows of goods and services between households and firms. The households sell the use of their labor, land, and capital to the firms in the markets for the factors of production. The firms then use these factors to produce goods and services, which in turn are sold to households in the markets for goods and services. Hence, the factors of production flow from households to firms, and goods and services flow from firms to households. The outer loop of the circular-flow diagram represents the corresponding flow of dollars. The households spend money to buy goods and services from the firms. The firms use some of the revenue from these sales to pay for the factors of production, such as the wages of their workers. Whats left is the profit of the firm owners, who themselves are members of households, Hence, spending on goods and services flows from households to firms, and income in the form of wages, rent, and profit flows from firms to households. Q: 2). Answer: Multiplier is a ratio expressing the quantitative relationship between the increase in national income and between the increases in investment, which induces the rise in income. The concept of multiplier was first developed by F.A. Kahn in early 1930s, and refined by Keynes. F.A. Kahns Multiplier is known as Employment Multiplier, and Keynes Multiplier is known as Investment Multiplier. According to Kahns Employment Multiplier, when government undertakes public works like roads, railways, irrigation works then people get employment. This is initial or primary employment. These people then spend their income on consumption goods. As a result, demand for consumption goods increases, which lead to increase in the output of concerned industries which provides further employment to more people. But the process does ~4~ Differentiate between static and dynamic multiplier.

not end here. The entrepreneurs and workers in such industries, in which investment has been made, also spend their newly obtained income which results in increasing output and employment opportunities. In this way, we see that the total employment so generated is many times more than the primary employment. Keynes income multiplier tells us that a given increase in investment ultimately creates total income which is many times the initial increases in income resulting from that investment. That is why it is called income multiplier or investment multiplier. Income multiplier indicates how many times the total income increases by a given initial investment. The Value of Multiplier =1/1-MPC Assumptions of Multiplier Effect The marginal propensity to consume remains constant throughout as the income increases. There is a net increase in investment over the preceding year. There is no any time-lag between the increase in investment and the resultant increment in income. Excess capacity exists in the consumer goods industries. The process of multiplier is that an initial change in aggregate demand can have much greater final impact on the level of equilibrium national income. This is commonly known as the multiplier effect and it comes about because injections of demand into the circular flow of income stimulate further rounds of spending. In other words; one persons spending is anothers income, and this can lead to a much bigger effect on equilibrium output and employment. Static Multiplier implies that change in investment causes in income instantaneously. It means that there is no time lag between the change in investment and change in income. The moment a Rupee is spent on investment project, societys income increases by a multiple of Re 1. K=1/1-MPC Dynamic Multiplier indicates that the change in the income as a result of change in investment is not instantaneous. There is a gradual process by which income changes as a result of change in investment. The process of change in income involves a time-lag. Since Multiplier process works through the process of income generation and consumption, the time lag involved is the gap between the change in income and the change in consumption at different stages. ~5~

The Dynamic Multiplier is essentially stage by stage computation of the change in income resulting from the change in investment till the full effect of the multiplier is realised. Q: 3). Describe briefly the Absolute income hypothesis. What are its main properties? Answer: Income Hypothesis is mainly about observing consumers behavior proportional to their income. This can be divided into three main categories.

Permanent Income Hypothesis (PIH) Absolute Income Hypothesis (AIH) and Relative Income Hypothesis (RIH)

The Absolute Income Hypothesis (AIH) is a theory by Keynes based on the fact that the consumption level of a household depends on its absolute level of income, therefore, if income rises, the consumption will also rise but not necessarily at the same rate. The (AIH) theory examines the relationship between income and consumption, and asserts that the consumption level of a household depends on its not relative but absolute level of income. As income rises, the theory asserts, consumption will also rise but not necessarily at the same rate. In its developed form, absolute income hypothesis is still generally accepted. The main properties of Absolute Income Hypothesis (AIH) are: 1) The real consumption expenditure is a positive function of the real current disposable income. This relationship between the consumption and income makes Absolute Income Hypothesis (AIH). Since this theory of consumption deals with economical phenomenon in the short-run, its treated as a short-run theory. 2) The Marginal Propensity to Consume (MPC) the proportion of the marginal income consumed ranges between zero and one. That is; 0 < MPC < 1(0 and 1 included). ~6~

3) The MPC is less than Average Propensity to Consume (APC), that is; C/Y < C/Y 4) The MPC declines as income increases, that is, the proportion of income consumed goes on decreasing. Q: 4). Why does an increase in the interest cause a decline in the bond price? What are their effects on the demand for money? Answer: Bond prices move inversely to interest rates. When interest rates go up, bond prices go down and when interest rates go down, bond prices go up. Remember, were talking about previously issued bonds trading on the open market. The inverse relationship is easy to see with this simple example. Say that a bond is issued for $10,000 for five years with a 5% coupon or interest rate, paid every six months. Then interest rates rise to 6%. If you want to sell this bond, who would buy it when it is paying 1% below market rates (5% vs. 6%)? You have to sweeten the deal so the buyer gets a market rate for the bond. You cant change the interest rate on the bond. Thats fixed at 5%. You can, however change the price you will take for the bond. The annual payment of $500 ($10,000 x 5%) must equal a 6% payment. Doing the math, you discover that the face value of the bond must be discounted to $8,333 so that the $500 fixed payment equals a 6% yield on the buyers investment ($8,333 x 6% = $500). The demand for money depends on how much of financial wealth one is willing to hold as money rather than in less liquid forms of wealth such as bonds. One of the important things that affect the demand for money is the movement in the market price of bonds and interest rates which are inversely related. If the interest rate goes up the opportunity cost of holding money rises, thus people will invest it in and interest bearing assets such as newly issued bonds, and vice versa.

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Businesses and governments sell bonds when they want to raise money. The supply of bonds increases pushing down bond prices. The demand for loan-able funds increases pulling up interest rates. Borrowers redeem their old bonds when they have excess money balances. The supply of bonds decreases pulling up bond prices. The demand for loan-able funds decreases pushing down interest rates. Q: 5). What is meant by monetary policy? How does it differ from fiscal policy? Answer: Monetary Policy is Economic strategy chosen by a government in deciding expansion or contraction in the country's money-supply. Applied usually through the central bank, a monetary policy employs three major tools: 1) Buying or selling national debt 2) Changing credit restrictions, and 3) Changing the interest rates by changing reserve requirements. Monetary policy plays the dominant role in control of the aggregatedemand and, by extension, of inflation in an economy, also called monetary regime. Monetary policy differs from Fiscal policy: 1) Monetary policy is usually carried out by the Central Bank and Monetary authorities. 2) Monetary Policy involves: a) Setting base interest rates, and b) Influencing the supply of money. E.g. Policy of quantitative easing to increase the supply of money. 3) Fiscal Policy is carried out by the government 4) Fiscal Policy involves: a) Changing Level of government spending, and b) Taxation. Hence this influences the level of government borrowing. ~8~

Assignment: B Three subjective Questions Q: 1). Explain the current account and capital account transactions and their implications on the balance of payments of a country. (2) Answer: International transactions are divided in two types; current and capital transactions. Current transactions are those that involve payments or receipts for the purchase of current goods and services, or in other words, for the purchase and sale of claims against countries' current output. The excess of receipts over payments on account of these transactions is called the current account balance. Capital transactions involve payments or receipts for the purchase of assets, that is, of claims against countries' future output. The excess of receipts over payments on account of capital transactions is called the capital account balance. The current account measures the net flow of goods and services between a country and the rest of the world. It consists of four main categories: goods, services, income, and transfers. Current account = balance of trade (exports of goods - imports of goods) + Balance on services (exports of services - imports of services) + Investment income and dividends + Net transfers The current account records transactions in goods and services between a country and the rest of the world. The capital account records transactions in assets both financial and nonfinancial. Strictly speaking, we should refer to the capital and financial account. Capital and financial account = capital account + financial account + errors and omissions The balance of payments is an accounting statement that delineates the transactions between a country and the rest of the world. The balance of payments is a statistical record, covering a particular time, of a countrys economic transactions with the rest of the world. The current account records the net transactions in goods and services while ~9~

the capital account records transactions in assets between countries. The relationship between these concepts is:
Balance of payments = current account capital account = 0

In other words, if the current account is in surplus, the capital account should be in deficit by an equivalent amount, and if the current account is in deficit, the capital account should be in surplus by an equivalent amount. The balance of payments has to balance, since it is an accounting statement it will always balance, that is, the sum of all debits or payments must equal the sum of all credits or receipts. This is guaranteed by the principles of double-entry bookkeeping. As a result, countries that are net importers of capital (exporters of securities) and have positive capital account balances will necessarily have equal negative balances on current account. A country with a current account deficit will necessarily have a capital account surplus, and one with a current account surplus will have a deficit in its capital account. Q: 2). Define the IS curve. Derive it graphically and explain the relationship between the interest rate and income. (2) Answer: The IS/LM model is a macroeconomic tool that demonstrates the relationship between interest rates and real output in the goods and services market and the money market. The intersection of the IS and LM curves is the "General Equilibrium" where there is simultaneous equilibrium in all the markets of the economy. IS/LM stands for Investment Saving / Liquidity preference Money supply. The IS (Investment/saving) curve is drawn as a downward-sloping curve with interest rates as a function of GDP (Y). It is a variation of the income-expenditure model incorporating market interest rates. In other words, IS Curve explains the relation between interest rates and the level of demand within the economy. The IS curve shows combinations of interest rates and income consistent with equilibrium in the demand for goods and services. The negative relation between the level of interest rates and the level of equilibrium demand for goods in the short run is the IS curve. ~ 10 ~

The IS curve is defined by this equation:

In a closed economy, the IS curve is defined as: In an open economy the IS curve is defined as:

IS/LM Model attempts to explain the investing decisions made by investors given the amount of money they have available and the interest rate they will receive. Equilibrium occurs when the amount of money invested equals the amount of money available for investing. The IS curve gives policy makers an indication of the effects of interest rates on economic output. Q: 3). Distinguish between MEC and MEI. Illustrate graphically the relationship between MEC and MEI. (2) Answer: Marginal efficiency of capital (MEC) is the difference between the expected yield on one more unit of a type of asset, and the cost of producing that unit. The marginal efficiency of that kind of capital whose marginal efficiency is the largest is the marginal efficiency of capital as a whole. ~ 11 ~

As investment increases, the marginal efficiency of capital falls, because the cost of producing assets rises and their yield falls as the supply of capital rises. Current investment is determined by the amount of investment that will push the marginal efficiency of capital down to the rate of interest. At equilibrium, the marginal efficiency of capital will equal the rate of interest. MEC is that rate of discount which equates present value of net expected revenue from an investment of capital to its cost. It is an annual percentage return on the last additional unit of capital. It represents the market rate of interest at which the investment becomes viable, also called marginal productivity of capital. MEC curve is a downward sloping curve because, as the firm invests more, MEC will fall due to diminishing returns, the first few projects invested in tend to give a higher rate of returns, with subsequent projects yielding lower and lower returns. Planned investment can change at each rate of interest. For example a rise in the expected rates of return on investment projects would cause an outward shift in the marginal efficiency of capital curve. This is shown by a shift from MEC1 to MEC2 in the diagram below. Conversely a fall in business confidence (perhaps because of fears of a recession) would cause a fall in expected rates of return on capital investment projects, The MEC curve shifts to the left (MEC3) and causes a fall in planned investment at each rate of interest.

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Marginal Efficiency of Investment (MEI) is the anticipated rate of return on a capital investment project undertaken by a business firm. Businesses typically compare the marginal efficiency of investment, abbreviated MEI, on physical capital with interest rate returns on financial capital when deciding to undertake an investment project. Because different investment projects have different returns, businesses often have a range of alternatives projects from which to choose. Combining all projects throughout the economy gives rise to an investment demand curve relating investment expenditures to the interest rate. The MEI curve represents the interest elasticity of demand for investment (or capital goods), or in other words, how responsive investment is to a change in interest rates. Interest rates represent the cost of borrowing. Theoretically, the lower the rate of interest, the cheaper it is for firms to finance investment, and the more profitable the investment will be. Hence, the level of investment will rise. The relationship between marginal efficiency of capital (MEC) and marginal efficiency of investment (MEI) is show by the following figure:

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Case study An Oil Crisis Provoked Policy Dilemma The sudden increase in the price of crude oil by the OPEC countries has put India in a fix. To top it, the Finance Ministry which had increased the market price of LPG and SKO (kerosene) had to partially roll it back, the former by Rs 10 and the latter by Rs 1 under political pressure. This means the burden on the Union Budget has increased on both gorounds, one because of an increase in the oil price internationally and second, because of the subsidy on petroleum products. All of these will result in an additional burden of Rs 560 crore, a burden which is unbearable, given the present situation of the Central Governments deficit. The fiscal deficit stands at a figure of 5.6 per cent as against the target of 4.5 percent. The situation by all standards is alarming. Some suggested that a temporary cut should be made in the import of crude oil, but this is a straight invitation to a supply of shock inflation, such that not only the prices in the economy go up, but there is a shortfall in the supply of various products including LPG, SKO, HSD (diesel) etc., a situation totally avoidable by all means. A more plausible argument was put forward by some other people in the finance Ministry, that of restructuring so that more emphasis is laid automatic stabilizers, various direct taxes like income tax, corporate tax etc. The argument that was put forward was, the industry was out of recession and corporate income seemed to be on a pick. The export sector was also booming with a growth rate of 15 percent. All these have a positive impact on the GDP growth rate (through the agricultural sector seemed to be pulling along without much growth in the services sector). The GDP at market price seemed to grow at an impressive rate of 7 percent (whereas the GDP at factor cost was growing only at 6.25 percent). All these make the industrial as well as the external sector, a good source of taxation. Ministry officials further said, in the face of a surging fiscal deficit, mainly due to interest repayment, the burden of government-increased taxation seems inevitable, and one is lucky that at least two sectors are doing well. However, the officials seem to have missed one point: a direct tax like income or corporate tax, which moves proportionally with the rising income has a dampening effect on not only the overall industrial and corporate atmosphere, but the total effect is a multiple of the initial tax burden as it affects the investment multiplier value negatively. Taxing the export sector also creates a negative multiplier effect. People from the ~ 14 ~

ministry seem to face a real dilemma. An increase in such proportional direct taxes make them instantaneously richer by Rs 9000 to 12000 crore, but there is a risk of putting the country back on yet another industrial slowdown. However, allowing further deficit back on yet another industrial slowdown. However, allowing further deficit in the budget is also by no means desirable. Questions Q: 1). Discuss the kind of inflation the country might face if there is shortage of crude oil in the economy. (2) Answer: A country with a shortage of crude oil in its economy faces cost-push inflation, which happens when costs increase independently of aggregate demand. The shortage of crude oil takes the price of oil to its highest levels, so price of oil and inflation are often seen as being connected in a cause and effect relationship. As oil prices move up or down, inflation follows in the same direction. The reason why this happens is that oil is a major input in the economy - it is used in critical activities such as fueling transportation and heating homes - and if input costs rise, so should the cost of end products. For example, if the price of oil rises, then it will cost more to make plastic, and a plastics company will then pass on some or all of this cost to the consumer, which raises prices and thus inflation. When a shortage of crude oil or any other input material happens, their price will inevitably gradually rise. This will increase firms' costs of production and may push up prices of finished goods until alternative of raw materials is found by the firm, or alternative finished goods is found by the consumers. This has happened with the fishing industry all over the world. Water pollution and over-fishing has put many types of fishes beyond the existence, making some fish-based products under extreme pressure, and forcing their prices up. In many countries equivalent problems have been caused by dissertation and erosion of land when forests have been cleared. The land quickly becomes useless for agriculture.

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Q: 2). How does a direct proportional tax have a negative multiplier effect on the economys level of income? (2) Answer: Direct taxes are taxes imposed directly on the individuals paying them. It is charged directly on the tax payer. In other words direct tax is that tax which is deducted from ones salary. Examples of direct taxation include; income tax, capital gains tax, property tax, and inheritance tax. Direct taxes may be proportional or flat which means all income levels are taxed at the same rate. It may at first glance appear equitable, but its usually considered unfair because it has a regressive effect on the taxpayer's total income. Direct Proportional taxes take the same percentage of income from all income groups. For example, low-income taxpayers would pay 10 percent, middle-income taxpayers would pay 10 percent, and highincome taxpayers would pay 10 percent. The sales tax is an example of a proportional tax because all consumers, regardless of income, pay the same fixed rate. Tax multiplier is always negative, because the decrease in taxes will increase the equilibrium national income and vice versa. Direct proportional taxation has negative multiplier effect on the economics level of income, and the reason is simple, direct proportional tax encourages low level income workers to give up working because they pay much of their income as tax, in other words they pay more than high income personals; it discourages savings because after paying tax, individuals and companies have less income available to save, and lead to tax evasion. All these will have negative impact on the economys level of income.

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Assignment C Q: 1). a) b) c) d) Q: 2). a) b) c) d) Q: 3). a) b) c) d) National income is also called: NNP at factor cost. () GNP at factor cost GDP at factor cost GDP at market price In a circular flow of income we have Production () Distribution Disposition All of the above In a four sector economy national income is measured as Y=C+I+G+X-M () Y=C+I+G-X-M Y=C+I+G+T Y=C+T+G+X-M

Q: 4). In a two sector economy circular flow of income takes place between firms and a) b) c) d) Q: 5). a) b) c) d) Q: 6). a) b) c) d) Government Foreign sector Households () Producers Which of the following is not a final good? Chair Book Alumina () Airplane Autonomous investment is that investment which is: Induced by demand Made irrespective of demand and savings. () Equal to savings Equal to demand

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Q: 7). Which of the following is not considered in calculation of national income? a) b) c) d) salary of employees of state electricity board Interest on bank deposits Dividend earn on share of any company Pension received by Govt. employees ()

Q: 8). Direct selling of Govt. securities by Central bank to general public is known as a) b) c) d) Open market operations () Selective credit control Indexation Statutory reserve ratio

Q: 9). A systematic record of a c ountrys external transactions over a period of one year is called a) b) c) d) Balance of Payments () Balance of trade Foreign trade Export import difference

Q: 10). Difference in the value of export and import of good is called a) b) c) d) a) b) c) d) a) b) c) d) Balance of Payments Balance of trade () Foreign trade Exchange rate Flow () Stock Both flow and stock None Fiscal Multiplier Accelerator Investment Multiplier () Employment Multiplier

Q: 11). What is the nature of capital transaction?

Q: 12). Keynes multiplier is known as

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Q: 13). The Value of Multiplier is a) b) c) d) a) b) c) d) a) b) c) d) k =1/1-MPC () k=1-MPC/1 k=1/1-MPS k=1-MPS/1 Aggregate Consumption=C+mps Aggregate Consumption= C + mpc (Y) () Aggregate Consumption=C+I Aggregate Consumption=C+S Downward sloping () Upward sloping U shaped Hyperbolic

Q: 14). What is the formula of Aggregate Consumption?

Q: 15). What is the shape of MEC curve?

Q: 16). The Permanent Income Hypothesis (PIH) decomposes measured total disposable income, y, into a) b) c) d) a) b) c) d) yp and yt () yp and cp cp and ct yp and cp Dusenberry () Modgliani Pigou Fisher

Q: 17). Relative Income Hypothesis is given by which economist?

Q: 18). Linear form of Consumption function can be expressed as follows a) b) c) d) C C C C = = = = f (Y) a + bY () a + bI YS

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Q: 19). The Chicago school has broadened the definition of money to include which components a) b) c) d) a) b) c) d) Currency, cheque-able demand deposits, time deposits. () currency, cheque-able demand deposits Cheque-able demand deposits, time deposits. Currency, time deposits. Consumption and investment Income and consumption Inflation and unemployment () Consumption unemployment

Q: 20). Philips curve shows the relation between

Q: 21). Q.21 The formula for obtaining the present value (V), or the capitalized value, of a constant income stream is given bya) b) c) d) V = R/i () V = R*i V = i/R None

Q: 22). ______________ It is levied as a percentage of the total value of the imported commodity. a) b) c) d) a) b) c) d) Specific Duties Compound Duties Sliding Scale Duties Ad Valorem Tariff () CAB = X - M + NY + NCT () CAB = X + M + NY + NCT CAB = X - M - NY + NCT CAB = X - M + NY NCT

Q: 23). The formula of Current account Balance is-

Q: 24). The new framework of monetary policy known as 'Competition and Credit Control' was introduced in which yeara) b) c) d) 1990 1980 1971 () 1950

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Q: 25). A contractionary fiscal policy occurs when a) b) c) d) G < T () G=T G>T None

Q: 26). Under this policy approach the target is to keep inflation, under a particular definition such as Consumer Price Index, within a desired range. a) b) c) d) Price level targeting Inflation targeting () Monetary aggregates Gold Standard

Q: 27). Which function of money removes the difficulty of double coincidence of wants? a) b) c) d) a) b) c) d) a) b) c) d) a) b) c) d) Medium of exchange () Measure of value Standard of deferred payments All of the above M1 () M2 M3 M4 Lack of common measure of value Lack of double coincidence of wants Difficulty in storage of extra goods All of the above () fisc (in English) is Inflation State treasury () State Borrowing State Expenditure

Q: 28). C + DD + OD = --------?

Q: 29). Barter system suffered from

Q: 30). The meaning of

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Q: 31). A deflationary government runs a a) b) c) d) Neutral budget Budget deficit Budget surplus () None

fiscal

stance

happens

when

the

Q: 32). The term economist? a) b) c) d)

"macroeconomics"

was

coined

by

which

Ragnar Frisch () Alfred Marshall Samuelson Chamberlin

Q: 33). Which method is very suitable for the primary sector such as agriculture, industries etc. a) b) c) d) Expenditure method Income Method Product method () All of the above

Q: 34). In which year Modigliani was awarded the Nobel Prize in economics a) b) c) d) a) b) c) d) 1980 1985 () 1975 1982 Maximum efficiency of capital Minimum efficiency of capital Marginal efficiency of capital () d)Mild efficiency of capital

Q: 35). MEC stands for

Q: 36). Who has classified the approaches to the definition of money under four categories: a) b) c) d) H.G. Johnson () Keynes Fisher Marris

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Q: 37). The Chicago approach of money was pioneered by a) b) c) d) a) b) c) d) Robins Milton Friedman () Schumpeter Boumal Current account deposits, net deposits, time deposits. Current account deposits, saving bank deposits, time deposits () Current account deposits, post office deposits, time deposits Current account deposits, national deposits, time deposits

Q: 38). Bank deposits include three kinds of deposits-

Q: 39). The income method of measuring national income is appropriate for the a) b) c) d) Tertiary and service sectors. Primary and secondary sector Primary and tertiary sector Secondary and tertiary sector ()

Q: 40). Which formula of Net National Product at market price is correct? a) b) c) d) NNP mp = GDP mp Depreciation () NNP mp = GNP mp Depreciation NNP mp = NNP fc Depreciation None

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