the World Development Indicators Website: http://databank.worldbank.org/data/rep
ID: 1194058 • Letter: T
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the World Development Indicators Website: http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators
1) Go to the World Development Indicators Website: http://databank.worldbank.org/data/reports.aspx?source world-development-indicators and download data for years 2003-2014 for Rwanda on (i) GDP per capita, measured in constant USD-we refer to this measure as real GDP per capita, (ii) GDP, measured in current USD. we refer to this measure as nominal GDP. Go to the UN Comtrade Website: http:/lcomtrade.un.org/data/ and download data for the same years (you may need to split up your query into several pieces) where the Reporter is Rwanda, the Partner is the World, and the Trade Flows are Export. This will give you Exports of Rwanda to the Rest of the World for the desired period. Obtain the data for total exports, denoted by Total--Total of all HS commodities, as well as for "Coffee, tea, mate and spices" a) (2 points) What is the commodity code for "Coffee, tea, mate and spices"? b) (2 points) What is the percentage of "Coffee, tea, mate and spices" in total exports of Rwanda in each year? What is the trend in this percentage over time: increasing, decreasing, constant? (2 points) Using the data from the two databases, compute the ratio of total exports to total nominal GDP for each year. What is the trend in this percentage over time: increasing, decreasing, constant? c) d) (2 points) What is the trend in Rwandan real GDP over time: increasing, decreasing, constant? e) (4 points) What is the percentage of "Coffee, tea, mate and spices" exports in nominal GDP? What is the trend in this variable over time: increasing, decreasing, constant? What is the trend in the nominal value of "Coffee, tea, mate and spices" exports: increasing, decreasing, constant? This variable is quite volatile from year to year. Why? f) (6 points) Based on our guest lecture, how can Rwandan coffee producers/exporters get richer over time?Explanation / Answer
Interest income $1,000 $10,000 x 0.10
Interest expense 700 $10,000 x 0.07
Net interest income (NII) $300
The decrease in net interest income is caused by the increase in financing cost without a corresponding increase in the earnings rate. Thus, the change in NII is caused by refinancing risk. The increase in market interest rates does not affect the interest income because the bond has a fixed-rate coupon for ten years. Note: this answer makes no assumption about reinvesting the first year’s interest income at the new higher rate.
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