Economics Homework Help

Question 1 :Assume we have a closed economy, the data you go over it on discussion 1 (table 17) show the following information for the third quarter of 2020 (assume export = import = net export = 0): 

• National income (excluding net export) = 517,536,000,000 SAR.

• Consumption equal 222,526,000,000 SAR.

• Government expenditures equal 140,199,000,000 SAR.

Assume that the consumption tax rate is 15% (Value Added Tax) and 20% for capital (investment). 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 has.

e- National saving.

f- On a few words; explain how the government could increase investment level using fiscal policy.

Question 2 : Briefly explain in words how does the value of money decline when inflation increased?  You can provide an example if you want.