Economists

University of Bahrain

College of Business Administration

Department of Economics & Finance

Macroeconomics Indicators of the Kingdom of Bahrain

ECON 141

Project #1

First Semester, 2020-2021

(Chapters 27, 28 & 29)

Student Name
Student ID		Section no

Instructions:

1. The assignment contains two parts: Part I and Part II. Answer all parts.

2. The total grade of this project is 20%.

3. The submission deadline is 16/11/2020 @11:00 PM. Late submissions will not be accepted.

4. Place your answers below each question.

Question	Part I	Part II	Total
Maximum Points	11	9	20
Points Obtained

Macroeconomics Indicators of the Kingdom of Bahrain

You are a consultant at the Economic Development Board. Given the following macro data for Bahrain’s economy over the period 2014 – 2018, answer the below questions.

Variable	2014	2015	2016	2017	2018
Net foreign direct investment (millions of current BHD)	2,962.69	3,328.87	3,541.35	3,849.29	4,276.99
Household final consumption expenditure (millions of current BHD)	5,083.84	5,312.25	5,448.56	5,596.35	5,605.00
Exports of goods and services (millions of current BHD)	12,058.00	9,702.80	__________	10,107.60	11,264.60
General government final expenditure (millions of current BHD)	2,024.33	2,064.76	2,073.93	2,217.66	2,310.75
Statistical discrepancy (millions of current BHD)	257.23	282.96	__________	__________	__________
GDP (millions of constant 2010 BHD)	11,567.97	10,589.49	__________	__________	__________
Inflation, consumer prices (annual %)	2.6	1.8	2.8	__________	2.1
Gross Fixed Capital Investments (millions of current BHD)	3,370.01	3,009.01	3,539.26	4,375.18	5,147.29
Imports of goods and services (millions of current BHD)	9,982.40	8,385.50	7,929.10	8,977.50	10,170.30
Consumer price index (2010 = 100)	108.5	110.5	__________	115.2	117.6
GDP per capita (constant 2010 BHD)	8,421	8,436	8,399	8,320	8,076
Labor force, total	758,359	777,895	817,831	869,405	926,959
Population ages 0-15, total	276,233	286,027	290,718	296,447	302,185
Population ages 15-64, total	1,029,181	1,053,939	1,101,674	1,162,183	1,229,175
Population ages over 64, total	30,661	31,885	33,399	35,444	38,079
Population, total	1,336,075	1,371,851	1,425,791	1,494,074	1,569,439
GDP (millions of current BHD)	__________	__________	12,126.05	__________	__________
Unemployment (% of total labor force)	3.9	3.6	3.3	3.02	__________
Employment (% of total labor force)	__________	__________	__________	__________	97.1
GDP growth (annual %)	__________	__________	__________	__________	__________
RGDP growth (annual %)	__________	__________	__________	__________	_________

Part I

Problems solving (11 marks)

1. Given the above data, determine the gross domestic product of Bahrain at each year. Explain the method used. (3 marks)

2. As a consultant, do you think it is possible to find out the value of Bahrain’s net exports at the year 2016 given the above information? If yes, what is the value of net exports and what does it reflect? (2 marks)

3. What is the value of Bahrain’s real production (Real GDP) in the years 2017 and 2018? (1 mark)

4. Calculate the growth rates of Bahrain's nominal GDP and real GDP? (2 marks)

5. What is the level of unemployment in Bahrain during 2018? (1 mark)

6. In 2017, what is the level of inflation in Bahrain? What does it indicate? (2 marks)

Part II

Essay question (9 marks)

Write a short report (max 500 words) analysing the above data of Bahrain’s economy over the period 2014 – 2018. The report must include the following (9 marks)

· The differences between the nominal and real gross domestic product of Bahrain.

· What does the growth in both nominal and real GDP reflect?

· Between 2016 and 2018, which phase of business cycle best describes Bahrain’s economy? What happens to the level of output, income, employment and unemployment?

· Explain the possible events that have resulted in lower output and negative growth in Bahrain’s GDP during specific years.

· Interpretation of GDP per capita values.

· The main effect of inflation rates over the citizens of Bahrain.