Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

By evaluating the economic performance of Utopia and Toughtimes from 2016-2020, what conclusions can be drawn? Is there any danger of either country experiencing an

image text in transcribed

By evaluating the economic performance of Utopia and Toughtimes from 2016-2020, what conclusions can be drawn? Is there any danger of either country experiencing an economic crisis in the future?

image text in transcribed
Utopia and Toughtimes are two neighboring countries. Both countries have a savings rate of 20% and follow a fixed exchange rate regime with their currencies pegged to the US dollar. The US is also the largest export market and trading partner for these two nations. The tables below summarize the economic performance of Utopia and Toughtimes over the last five years (2016-2020). Over the same time period the real GNP of US has grown at an average rate of 2.5% and its inflation rate has been 3%. Utopia 2016 2017 2018 2019 2020 Current Account balance (billion 35 38 -44 -48 -55 dollars) GNP (billion dollars) 1000 1020 1035.3 1050.83 1071.85 Budget deficit (billion 20 37 45 94 115 dollars) Inflation rate (%) 4 6 7 7 8 Unemployment rate 3 3.5 5 6 (%) 6.5 Toughtimes 2016 2017 2018 2019 2020 Current Account balance (billion -37 -37 -38 39 -37 dollars) GNP (billion dollars) 800 816 840.48 865.69 891.67 Budget deficit (billion 20 15 12 8 4 dollars) Inflation rate (%) 4 3.5 3 2.8 2.5 Unemployment rate 6 5 5 4.5 4 (%) Budget deficit is the difference between government expenditure and tax revenue (G-T). The GNP, Current Account balance and the budget deficit are adjusted for inflation (i.e., they are measured in constant US dollars)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Statistics The Exploration & Analysis Of Data

Authors: Roxy Peck, Jay L. Devore

7th Edition

0840058012, 978-0840058010

More Books

Students also viewed these Economics questions