Question
Question 1 Assume we have a closed economy, the data you go over it on discussion 1 show the following information for the first quarter
Question 1 Assume we have a closed economy, the data you go over it on discussion 1 show the following information for the first quarter of 2021 (assume export = import = net export = 0):
National income (excluding net export) = 540,170,656,840 SAR.
Consumption equal 240,691, 239,879 SAR.
Government expenditures equal 139,731, 741,344 SAR.
Assume that the consumption tax rate is 15% (Value Added Tax) and investment 20% for capital. Solve for the following (parts a to e) if Saudi Arabia is considered a closed economy:
a-Tax revenue Hint, there are two types of tax; sales tax (VAT) and capital or investment.First, calculate investment to find tax revenue from investment.Add these two together.
b-Investment.
c-Private saving.
d-Public saving and what kind of budget does Saudi Arabia have.
e-National saving.
f-On a few words; explain how the government could increase investment level using fiscal policy.
Question 2 Show how national saving equal investment and NCO using national income identity formula for open economy.
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