Question

QUESTION 3 Tribons of dolers GDP Consumption Government spending Exports Imports Budget balance Given the values in the table, and assuming transfer payments trillion (Round to one decimal place.) , compute the value of private saving. Private saving QUESTION 4 Trons GDP Consumption Government pending Exports Imports Budget balance What is the value of national savings for the hypothetical economy whose data is given in the table? National Savings trillion.(Round to one decimal place.) 5

Answer 1

Solution:-

(3). Calculate Private Savings:-

Net Taxes = Government savings + government spending + transfer payments

                 = -1.2 + 3 + 0

                 = 1.8

Private savings = Y-T + TR – C

                         = 15.9 – 1.8 + 0 – 11.3

                         = 2.8

(4). Calculate National Savings:-

National savings = government savings + private savings

                            = -1.2 + 2.8

                         = 1.6

(5). Calculate Net Capital inflow:-

Net capital inflow = Export – Import

                            = 2.2 – 2.7

                            = -0.5

(6). Calculate Investment:-

GDP = C + I + G + (X-I)

      I = Y – C – G - X + M

     I = 15.9 – 11.3 – 3 – 2.2 + 2.7

      I = 2.1