Question

United Arab Emirate’s diversified economic base and the composition and growth rates of its main international trading partners often multiplies or augments / diminishes the impact of trends in the world economy. For example, the Emirate grew faster than global output from 2012to 2015, strong economy is the main secret of prosperity and high level of development of the UAE. Effective economic system has brought the Emirates to a totally new level that enables the country to outperform in terms of business activities majority of the European countries.

The United Arab Emirates is characterized by open economy with large positive surplus and high standards of living.

Question -1 (10 Marks)

Describe the circular flow model for UAE open economy with the help of diagram. (* Guidelines: in the circular flow model include how goods and services are exchanged for price, how factor of production render their services and get paid in return etc.)

.

Question 2 (5marks)

2. In your opinion would the supply Price determination of iPhones 11 in the United States be studied under microeconomics or macroeconomics.

Answer 1

I will answer only Q1 as per HomeworkLib policy. Kindly accept HomeworkLib policy

Countries that trade with other countries are called open economies .In an open economy households import from outside and this comes out from the circular flow. Foreign trade in an open economy makes resources and money to leak out of the circular flow model. In order to have macroeconomic equilibrium total income should be equal to total spending in an economy