After finishing the first half of the semester, you should be able relate what you have learned so far into the macroeconomic data. So, read the following statements and explain that using what you have learned such as productivity & production and GDP growth & GDP components. Then, relate that to the attached tables:
What happened to the GDP in general and the GDP by economic activity on table 1 or table 4 (table 4 is easier) during the pandemic? Which sector has been affected more during the pandemic and why would you think this sector has been affected more?
One of the most important targets for the Vision 2030 is to switch the production in Saudi Arabia from mostly depending on Oil to diversify its production, would you think we are going into the target of diversifying production through looking at the tables 15 & 16 (table 16 is easier to see because it shows the growth) from 2018 to 2021. You can also look at tables 8 and 10 for annual data.
technical explanations can be proposed with regards to why the country’s economic growth is in deficit. A primary one being the concept of demand-pull inflation which comes about as a result of the demand for goods surpassing the supply available. However, no fundamental increase in aggregate demand was displayed in the case of Venezuela. Instead, the supply fell considerably short. The lack of foreign currency reserves lead to the inability to import fundamental commodities beyond a particular point causing a demand-pull inflation. What’s more, producers increased the prices of their goods and services in order to relay the increased production costs. This is referred to as cost-pull inflation. The lack of ability to secure imports in Venezuela contributed to the rise in production costs. This played a role in the further hindrance of Venezuela’s domestic production (Profolus 2018). Under Maduro’s regulation, the money supply and minimum wage were increased, in attempt to manage consumer spending capabilities, as already discussed. The monetary explanation – is partially applicable when trying to understand the causes of Venezuela’s hyperinflation and it states that the idea of excess money supply with the same amount of goods leads to the decrease in value of a currency. The current state of Venezuela, demonstrates the profligacy exhibited that lead to fiscal dominance of monetary policy. In attempt to diminish the gap between spending and revenue, a government may decide to fund expenditures via tax revenues – bonds that are to be paid back through future tax revenues or through central bank seigniorage – could be implemented. Seigniorage reliance from the government is likely to govern a lack of incline to continue using a currency which is losing value. Part of the seigniorage serves a purpose as an inflation tax. The rate of inflation acts as a tax rate therefore an increasing rate of inflation would result in higher levels of revenue for the government. This however, is dependent on the public’s willingness to maintain real money balances as an increase in inflation means a decrease in money balances available for public holding – potentially limiting the revenue generated by the government. In e>GET ANSWER