Q2 Purpose The Purpose Of This Case Study Is To Practice Using National Account Data To Understand The Size Of Savings 1 (52.94 KiB) Viewed 29 times
Q2 Purpose The Purpose Of This Case Study Is To Practice Using National Account Data To Understand The Size Of Savings 2 (38.07 KiB) Viewed 29 times
Q2. Purpose The purpose of this case study is to practice using national account data to understand the size of savings and investment, the direction of capital flows, and the pressures on the interest rate. The United Arab Emirates in 2019: A Snapshot Sources: Interational Financial Statistics (International Monetary Fund) by way of Kogema Notes: • The United Arab Emirates (UAE) is a country in the Middle East made up of seven federations, including Abu Dhabi and Dubai. • The currency of UAE is the dirham. UAE has pegged the dirham to the US dollar (which means that the exchange rate between the UAE and the US does not fluctuate) at a rate of roughly 3.7 dirham per dollar • The data below is nominal data from 2019, denominated in dirham. Due to rounding in the data (for ease of computation), your answers will not be perfectly precise. UAE National Accounts, 2019 • GDP: 1,546 billion • Consumption: 602 billion • Government spending: 205 billion Government tax revenue: 193 billion Exports: 1,430 billion Imports: 1,060 billion
Questions (Understanding and Application) 10 points a) What was the size of private savings in the UAE in 2019? b) What was the size of public savings in the UAE in 2019? c) What was the size of national savings in the UAE in 2019? d) What was the size of net capital inflows in the UAE in 2019? e) What was the size of investment in the UAE in 2019? Questions (Application and Analysis) ) If the UAE had been a closed economy (which it is not - it is very heavily dependent upon international trade) in 2019, what would its investment have been? g) How is the budget balance affecting the interest rate? How are net capital inflows affecting the interest rate (versus if the UAE had been a closed economy)? h) Over the past year, the UAE central bank has taken steps to bring down the interest rate. How does this affect borrowers? How does this affect savers? Why might the central bank have chosen to do this?
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