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In: Economics

Question 4. (5 Marks) CLO4 The GCC countries’ economies had been growing steadily over the past...

Question 4. CLO4

The GCC countries’ economies had been growing steadily over the past few years since the financial crisis of 2008 and their economies grew at 3.16% in 2016.

  1. How long will take to double their economic growth? (2 Point)
  1. Explain what factors might influence UAE’s future rate of economic growth. (3 Point)

Solutions

Expert Solution

A.

Based upon the Rule of 70, we have:

No. of years to double the economic growth = 70 / Annual % growth rate

Given the economic growth = 3.16%

Doubling Time = 70 / 3.16 = 22.15

It will take near to 22 years for the economic growth to get doubled.

B.

Factors that can influence UAE future economic growth:

Current State of Technology, Human Capital Stock, Availability of Natural Resources, Consumer's outlook towards the UAE economy, Labor

if UAE adopts policy to invest heavily in the human capital of its nation, then there can be increase in future economic growth.  technological advancements shift the PPF curve of UAE outward indicating rise in economic growth.

Fiscal and Monetary Policy play a crucial role for future economic growth. If the Central Bank of UAE is able to anchor the inflation well and creates credibility among the residents, then there are high chances of future economic growth.

Rahul Sunny answered 9 months ago
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