d) if the economy\'s total output equilibrium is $200, the labor input is fixed
ID: 1137426 • Letter: D
Question
d) if the economy's total output equilibrium is $200, the labor input is fixed at L 16, what is the long-run equilibrium wage rate, w? 4. (6 pts). Suppose i n a small gpen economy, real GDP is $700 billion, consumption is $500 billion, investment is $50 billion, government purchases are $130 bilion. (a) Does this country have capital outflow or inflow? How do you know it? How much is it? (b) What is this country's national saving rate, ? (c) if net taxes are $120, what is this country's private saving rate, z 1?Explanation / Answer
Question 4
a) Real GDP = C+I+G+NX
NX = Real GDP – (C+I+G)
NX = 700-(500+50+130) = $20 billion. So there is net inflow because the Net Exports are positive which implies that our exports are more than our imports.
Net inflow = NX = $20 billion
b) National Savings(S) = I+ NX
S = 50+20 = $70 billion.
National Savings rate = S/Y = 70/700 =0.1
c) Net taxes = $120
Private savings(Sp) = Real GDP -Net Taxes-Consumption
Sp = 700 – 120-500 = 80
Private saving rate = 80/700 = 0.11
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