The world consists of three countries, Alpha, Beta, and Gamma. The table below provides some macroeconomic data
Question:
The world consists of three countries, Alpha, Beta, and Gamma. The table below provides some macroeconomic data for these three countries. Additional information about these countries:
• Households in all three countries consume 56% of output.
• The government of Alpha collects one-third of total income as taxes, and it runs a budget surplus of 450.
• Alpha’s sales of goods and services abroad represent 30% of its output, and half of the sales goes to Beta. It also runs a balanced balance of payments.
• In Beta, the government runs budget deficit of 280 while the central bank depletes its holding of foreign assets by 428.
• Beta has a current account deficit of 60 with Alpha.
• The levels of financial assets purchased by the residents of Beta from Alpha and Gamma reach 545 and 1000 respectively.
• Beta’s residents receive asset transfers of 75 and 50 from residents of Alpha and Gamma respectively. No market transactions are involved in these transfers. In addition, these are the only asset transfers among these three countries.
• Gamma country allocates 17% of its output to build up (physical) capital stock.
• Gamma runs a balanced trade with Alpha, and its stock of official reserves increases by 428.
• Gamma’s residents sell 375 worth of financial assets to Alpha’s residents.
• The central banks of all three countries do not make any transaction with the private sector. In other words, the central banks only make transactions with other countries’ monetary authorities.
Taxation for Decision Makers 2014
ISBN: 9781118654545
6th edition
Authors: Shirley Dennis Escoffier, Karen Fortin