Answer to Question #156476 in Microeconomics for Sana

Question

Following are the transactions in Paris city last year:                                   

Item                                                                 AED

Taxes                                                              200,000

Investments                                                     300,000

Government Expenditure                                150,000

Exports                                                            250,000

Savings                                                            500,000

1.     Calculate government balance and explain the result.   (2 marks)

                                                                        

1.  Calculate private sector balance.       (2 marks)                                                                                     

Calculate net exports and explain the result.       (2 marks)

Answer 1

Calculate the government balance and explain the result.

Taxes-Investment-Government Costs + Exports + Savings = 500,000

Since the calculated balance is positive, it should be noted that this economy is in the growth stage, or at the peak of the economic cycle.

 Calculate the balance of the private sector.

The private sector needs relevant data such as total wages, government transfers, household consumption, etc.

Calculate net exports and explain the result.

To calculate net exports, you must use the formula: export-import.