5. In Hypothetia, which is a very nice closed economy, there is a factory producing furniture. The VAT rate is 10%, the

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5 In Hypothetia Which Is A Very Nice Closed Economy There Is A Factory Producing Furniture The Vat Rate Is 10 The 1 (123.24 KiB) Viewed 34 times

5. In Hypothetia, which is a very nice closed economy, there is a factory producing furniture. The VAT rate is 10%, the income tax rate is 5%. Capital goods do not depreciate. The table below describes transactions in this economy: FG Income IT (6 (7) (8) VAT (9) Good Producer/buyer VT (1) (2) (3) (4) Machine Machine Furniture 990 Wood Wood Furniture 44 Furniture Furniture Consumers 33 Furniture Furniture Government 22 VA (5) 990,0 44,0 6,6 4,4 VT - value of transactions, VA - value added, FG - final goods, IT – income tax, VAT - value added tax (all values in market prices) a) Fill in the table. b) Calculate the GDP, using three different methods. Calculate GNP, NNP in market and basic prices. Calculate the household's disposable income, assuming that the government budget is balanced. d) Why does the GDP differ from the value of transactions in this economy? e) Check whether injections to the circular flow = leakages from the circular flow. f) Assume that the GDP does not change, but the households intend to save 1000 (or 900). Do the injections still equal leakages?