Reference no: EM133256142
The government of a small island country is concerned about a few things and has hired you as an economic consultant to do some economic analysis for 2020. First, the government is worried that the inflation rate in the country is too high. This could reduce the purchasing power and the standards of living of the residents. Second, it suspects that the residents are importing too much goods and services from foreign countries. This could result in unemployment in the island. Third, and finally, it fears that the entrepreneurs are making too much profit and this could lead to unrest in the country.
The government has been able to calculate the following statistics (converted to dollars), which you will use to carry out your assignment. All the data pertain to 2020. All the numbers except for real GDP are in nominal terms. The base year in this country for the calculation of real GDP is 2019.
GDP Information:
Nominal GDP = $106,000,000
Real GDP = $100,000,000
Expenditures:
Consumption = $90,100,000
Investment = $12,000,000
Government Purchases = $6,000,000
Exports = $4,000,000
Factor Incomes:
Wages = $65,000,000
Interest = $20,000,000
Rent = $5,000,000
You calculate that in 2020:
Inflation rate over 2019 = ____ percent
Imports = ___ dollars
Profits = _____ dollars