FPT UNIVERSITY- CAMPUS CAN THO
INDIVIDUAL ASSIGNMENT
IA 1 (chapter 23): Is GDP deflator good or bad for the economy. Use 1 real
example (1 country) to prove it. Min 300 words.
When inflation falls, the country's economy faces falling prices for services and
goods due to rising unemployment and falling incomes. This can have a strong
impact on consumers' purchasing power, as well as reduce their ability to
consume. Besides, for businesses, decreasing inflation increases production
costs and low production capacity, negatively affecting investment and profits.
Furthermore, if GDP inflation reaches an alarmingly low level, it can lead to
economic recession, oversupply, price drops, unemployment, etc.
On the contrary, increased prices of goods and services - increased inflation -
help increase the personal income of workers, increase revenue and profits for
businesses, increase taxes, and also increase investment capital. However, rising
inflation also has its dark side, such as causing a gap between rich and poor in
society, losing currency value, and reducing consumer purchasing power due to
increased prices of goods and services, At the same time, it disrupts the balance
of supply and demand of goods in the market
Therefore, the GDP index reflects a healthy balance between supply and
demand, so economies in countries need to maintain stable inflation levels
consistent with a sustainable economy.
A typical example is Japan:
Based on the above data, in 2021 Japan will reach the highest GDP deflation
index in the 2018-2021 period of 84.4%. Besides, Japan's GDP deflator
increased by 4.6% during this period.
This also reflects improvements in productivity and efficiency, which also
translates into growth benefits for the Japanese economy. For example, Japan
can utilize the same amount of raw materials and labor resources to create and
produce many types of goods and services, meaning prices will decrease but
real GDP will increase significantly, helping increase personal income for
people, workers, and businesses, and encourage investment and consumption.
But at the same time, this also has a dark side, if it reflects a decline in demand
due to an excess of supply. Reduces profits, and reduces production and
recruitment motivation.
Reference:
https://www.globaldata.com/data-insights/macroeconomic/the-gdp-deflator-of-
japan-247889/
https://fred.stlouisfed.org/series/JPNGDPDEFAISMEI
IA 2 (chapter 24): Analyze any country’s CPI basket except Vietnam (use
real statistics). Min 300 words.
Total CPI for UK
Based on charts and data from The Fred Economic Data, it shows that
compared to the average price of the basket in 2015 (base year), the
average price of the basket in 2020 is 8.5% higher when only the UK CPI
number in the first month of 2020 reached 108.5. Besides, compared to
2019, the average price of the basket increased by 0.8% in 2020.
Over 1 year CPI has increased 4.0% since December 2023, up 3.9% from
November and down 11% from the recent peak - which was in October
2022. Based on the model Indications, consumer price inflation estimates
show that October 2022 peaked at the highest rate in more than 40 years.
Besides, the December 2023 annual rate was the second lowest since
September 2021.
Over the year to December 2023, core CPI (excluding energy, food,
alcohol, and tobacco) increased 5.1%. Besides, the annual CPI rate of
goods decreased from 2.0% to 1.9%, while the annual CPI rate of services
increased from 6.3% to 6.4%.
According to charts from the Office for National Statistics and according
to the Office for National Statistics (ONS), there are a total of 720 types
of goods and services in the years 2011-2023 and are divided into 12
groups:
- Food and non-alcoholic beverages
- Alcoholic beverages and tobacco
- Clothes and shoes
- Housing, water, electricity, gas and other fuels
- Failure, equipment and maintenance
- Healthy
- Focusing
- Communicate
- Entertainment and culture
- Education
- Restaurant Hotel
- Other goods and services
Besides, changes in shopping carts also reflect changes in consumers'
preferences, habits and lifestyles.
Based on data, it can be seen that the cause of inflation in most periods since
1989 is due to the growth of housing costs of homeowners (CPIH) including
housing and household services. family, gas, and electricity prices. Peaking in
December 1990, gas prices (9%), electricity (9.1%), and housing costs (12%)
increased. This also contributed 4.26 percentage points to CPIH's 12-month
growth rate of 9.2%.
Inflation is also widespread again in 2022, with all CPIH components
contributing positively to the 12-month rate from August 2021. Furthermore,
the oil price shock and World food prices are also contributing to inflationary
pressures.
Reference:
https://fred.stlouisfed.org/series/GBRCPIALLMINMEI
https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/
consumerpriceinflation/december2023#toc
https://www.ons.gov.uk/economy/inflationandpriceindices/articles/
consumerpriceinflationhistoricalestimatesandrecenttrendsuk/1950to2022
IA 3 (chapter 25): Why is productivity so important for economic growth?
Use 1 real example (1 country) to prove it. Min 300 words.
Productivity is important for economic growth because high productivity also
reflects the ability to produce more output (goods and services) with the same
amount of inputs or less. This can also produce more goods and services for
consumers, investment, and trade, helping to improve living standards and
welfare, and meeting people's needs. Besides, high productivity also helps
reduce inflationary pressure, increase income, and enhance competitiveness in
the international market, especially in the context of deep economic integration.
Besides, if labor productivity is low, it means output and quality in the
production and provision of goods and services decrease. Reduces worker
productivity such as low wages, poorer working conditions, and environment.
For the government, reduced labor productivity reduces tax revenue.
Example:
There is the chart about view Ireland’s labour productivity growth from Mar
1999 to Jun 2023:
Based on this chart, we can see that Ireland Labour Productivity dropped by
3.99 % YoY in Jun 2023, compared with a drop of 2.87 % in the previous
quarter.
Based on the above data, it shows that labor productivity for the entire Irish
economy is €102/hour in 2021, an annual increase of 5.5%. In addition, labor
productivity has an annual increase of 4.7% during the period from 2011 to
2021. This figure reflects a 1% decrease in labor productivity in the domestic
sector in 2021 due to The impact of the COVID-19 epidemic on output and
employment.
In contrast, labor productivity in the foreign sector was €370/hour, up 8.3%
thanks to the performance of the high-productivity manufacturing Affairs and
Information & Communications (ICT) sectors. Based on the data, it also shows
that Ireland's economic growth depends heavily on the performance of the
foreign sector, accounting for 40% of total output and 80% of total export
turnover.
Because Ireland is a small country and heavily dependent on exports, increasing
labor productivity is an opportunity to access international trade and markets, as
well as attract foreign investment and create new opportunities. products,
goods, and services of higher value. At the same time, it also helps increase per
capita income and reduce the gap between rich and poor in society.
Therefore, some experts recommend that Ireland should diversify its economic base,
and improve, innovate, and enhance human resources, public services, and
infrastructure to ensure balanced and sustainable growth than.
Reference:
Ireland Labour Productivity Growth, 1999 – 2023 | CEIC Data
Labour Productivity - CSO - Central Statistics Office
