Future economic glowth

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Reference no: EM131034

Although the country produced several types of commodities (goods and services) in the year 2003. but this country's Central Statistics Otice has grouped such commodities into fbur broad categodes (A to D) for the purpose olestimating private consumption and government expenditures for the year 2003.


Further, during 2003, $20bn worth ofshares were purchased by the citizen ofthe country. Total corporate prcfits durjng the year were $90bn. Additionally, $200bn was paid as rent, and tbe capital eamed an interest of$8obn in that year.The government also spcnt $5bo on social-securiry benefits, and provided $20bn ofsubsidies to the poor during this year. The indirect taxes contributed $30bn to the government rcvenues and $40bn was paid by the households to the govemment, as direct taxes, during this year.

The wages and salaries for this yeaf amounted to $200bn, and the country imported $40bn worth olgood and services (All prices are in 2003 dollars.) lor the year 2008, the government's dircct ta,xation revenue was $40bn. The govemment spent $20bn on social-security benefits. The net exports for dris year amounted to $0 (all prices are in 2008 dolltrs). Other particulats lor 2008 (at 2008 prices) include:

Govemment productive expenditure  $200bn
Privateconsumptionexpenditure       $400bn
lnterest on capital                        $180bn
Tndirect taxes                             $50bn
Gross investment                         $l00bn
Co.porafe prohts                          $50bn
Wases/salaries                            $260bn

. National lncome data for the year 2013 is shown below.

1217_STATUS OF the ECONOMY1.png

. While it is dilficult to precisely predict future economic glowth' the country's leading economists believe that ifno measures are taken to rcvitalize the economy now (that is' in 2013), the economy will begin to contract and that the futler effect ofsuch contraction will become evident in the year 2018. Various estimates for the year 2018 (al 2018 prices) are:



. The CDP deflators for the years 2003, 2008, and 2012 ate 86, 90, and 100, respectively lf no investment is made in 2013, the estimated deflator for the year 2018 is expected to be 150.

. lf however an investment is made (in Proposal A or Proposal B) in 2013, the real GDP for 2018 (expressed in 2013 dollars) would be $800bn in the case ofProposal A and $820bn in the case ofProposal B. Due to slightly different economic dynamics associated with these two proposals, the cotesponding GDP deflators, for the year 201 8, would be | 60 and 170, respectively.

Reference no: EM131034

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