Instructions:

1. Provide answers to all the questions and put the source of your data where necessary. Plagiarism and direct copying from another groups work would attract mark deductions from each of the group
2. Submit your Group Assignment to your instructors email address
3. Submission is due by 10 pm on Saturday 7^th May 2022

Question# 1 (10 marks)

A)

During the Covid-19 pandemic, Saudi government came up with various spending by giving various stimulus packages to both businesses and households to support them. However, in July 2020, the government also increased VAT from 5% to 15%.

1. What fiscal policy action would you have expected from the government based on your knowledge of macroeconomics?
2. Is the action of government above consistent with your expectation?
3. If yes or no, give explanation why the government might have taken this action she took in the above scenario (hint: the concept of multiplier could be of help here)

B)

i. With your knowledge of AD/AS, suppose the Saudi government engaged in expansionary policy by increasing her spending during Covid-19, and assuming that the economy is not at full employment (below maximum capacity level), what would be the macroeconomic consequences on aggregate income and price level. This needs to be properly explained using both explanatory and graphical illustration.

ii. Suppose the economy is at full employment, using AD/AS with the same scenario as above what would be the macroeconomic consequences on aggregate income and price level. This needs to be properly explained using both explanatory and graphical illustration.

Question# 2 (5 marks)

A) Assume the following information for Bank XYZ in Saudi Arabia (Amount in Saudi Riyals):

ASSETS		LIABILITIES
Reserves	1000	Deposits	7, 000
Loans	6000

The required reserve ratio is 10 percent.

i. How much is the bank required to hold as reserves given its deposits of SAR7, 000?

ii. How much are its excess reserves?

iii. By how much can the bank increase its loans?

Question# 3 (15 marks)

(a) Find the GDP of Saudi Arabia (Current US Dollars), (Constant 2015 US Dollars), Real GDP Growth Rate; Real GDP per capita, unemployment rate and inflation rate of Saudi Arabia from 2016 to 2020. Using these two figures to obtain GDP per capita for 2016 to 2020 at Current US Dollars and at Constant 2015 US Dollars. Also, find the unemployment rate and inflation rate of Saudi Arabia from year 2016 to 2020. Note that it is compulsory to put your source of data at the bottom of the table, otherwise marks will be deducted.

Year	GDP (current USD)	GDP (constant 2015 USD)	Real GDP growth rate	GDP per capita (constant 2015 USD)	Unemployment rate	Inflation rate
2016
2017
2018
2019
2020

Source of the data:

(b) Take any three of the variables above and compare them with that of any other 2 GCC, using the five years above.