In the face of adverse internal and external developments of an extraordinarynature, Pakistan’s economy has shown great resilience against shocks of veryhigh intensity. Domestic factors like heightened political tensions, an unstable lawand order situation, supply shocks, coupled with external factors like a worseningof international financial crisis, and an unprecedented rise in global food andenergy prices tested the strength of economic fundamentals but Pakistan’seconomy grew robustly in 2007-08, as compared to last year.Pakistan’s real per capita income has risen at a faster pace during the last sixyears leading to a rise in average income of the people. Such increases in realper capita income have led to a sharp increase in consumer spending during theyear. Relatively slower growth in consumption in 2005-06 and 2006-07 wasmainly attributed to the tight monetary policy pursued by the State Bank ofPakistan but with rising inflation real interest rate actually declined and thusboosted private consumption in the current year.The data about the components of expenditures of Pakistan economy for theyear 2007 is given in the following table:Components of expenditures (2007)Total (billions of dollars)ConsumptionNondurable goods 2309.00Durable goods 1282.80Services 5694.40InvestmentNonresidential fixed investment 1583.80Residential fixed investment 639.20Inventory investment -5.90Government purchasesDefense expenditures 682.90Non defense expenditures 817.10State and local expenditures 1995.50Net exportsExports 1862.40Imports 2270.8016- The Gross Domestic Product (GDP) for the year 2007 is:Marks: 2A. $13707.60 billionB. $14590.40 billionC. $14962.60 billionD. $15835.60 billion17 – The net exports for the year 2007 is:Marks: 2A. $406.80 billionB. -$407.20 billionC. -$408.40 billionD. $409.60 billion18- If the depreciation in the year 2007 is $1380 billion then what is theamount of Net Domestic Product (NDP)?Marks: 2A. $11426.63 billionB. $12306.54 billionC. $12400.80 billionD. $13210.40 billion19- Suppose nominal GDP for year 2007 grew from $10,000 billion to$12,000 billion in 2 years. Over the same 2 years, the inflation rate wasexactly 4 percent each year. What will be TRUE about the output level overthese 2 years?Marks: 2A. Output will fall.B. Output will stay at the same level.C. Output will grow, but less than 4 percent.D. Output will grow by 4 percent.20- If the GDP deflator was 100 in the base year of 2006, and was 105 in2007, we can say that:Marks: 2A. The price level increased by 5 percent from 2006 to 2007.B. The price level increased by 205 percent from 2006 to 2007.C. The price level increased by 105 percent from 2006 to 2007.D. We cannot judge price increases from changes in the GDP deflator.

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