Question

We have the following data for a hypothetical open economy GNP = $10,000 Consumption (C) = $7,200 Investment (1) = $800 Government Purchases (G) = $1,200 Tax Collections (T) = $1,400 What is the value of private savings plus public savings? $ (Enter your answer as an integer. Include a minus sign if necessary.) What is the value of the current account balance CA? (Enter your answer as an integer. Include a minus sign if necessary)

Answer 1

1)

Saving = Public saving + Private Saving

Private saving = Y - T-C

= 10 000 - 1400 -7200

= 1400

Public saving = T -G

= 1400 - 1200

= 200

Total Saving = 1400 + 200

= 1600

2)

Y = C+I+G+Xn

10000 = 7200+800+ 1200 +Xn

Xn = 800

Current account balance = 800.