Question
Last year Econland's GDP was US$100 billion, making the economy roughly the size of Puerto Rico or Hungary. Econland is affected by global economic conditions,
Last year Econland's GDP was US$100 billion, making the economy roughly the size of Puerto Rico or Hungary. Econland is affected by global economic conditions, but it is too small to impact the global economy in return. Exports and imports both account for 25% of GDP.
Last year, the world economy did well and Econland experienced solid economic growth (2.4%). Unemployment is low (5%), and inflation (at 2%) and the budget deficit (2.8% of GDP) are under control. Total government debt is 60% of GDP.
The outlook for next year is moderately positive, with the International Monetary Fund (IMF) predicting world economic growth of 2.4%. The Consumer Confidence Index is at its long-term average of 100.
Forecast World Economic Growth % 2.4
Econland Consumer Confidence Index
Given last year interest rate at 3%, Income tax rate at 24%,Corporate tax rate at 30% and government expenditure at $30billion
With the above data given, as a policy advisor what will be your economic policy decisions and adjustment in fiscal policy as well as government spending and the major economic indicators for next year economic enrichment. Please explain what your decisions are in terms of changes you will make to income tax, rate interest rate,corporate tax rate and government spending.
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