IMP QUESTION

Posted by vandita24x7 on Feb 15, 2014; 11:24am
URL: http://discussion-forum.276.s1.nabble.com/IMP-QUESTION-tp7584788.html

A closed economy which has a capital-output ratio of 4 is currently growing at 6 percent

per annum with full employment. In this economy, workers do not save and 50% of

profits are saved. Also, currently the only tax in this economy is a 25% tax on profits, of

which the government uses half to carry out public investments and the other half to

provide social services to workers.

What is the pre-tax share of profit in the national income of this economy?

a)24 b)36 c)48 d)60