I already finished part A and B, I just confuse for the Part C, does someone can

Question

I already finished part A and B, I just confuse for the Part C, does someone can help me solve it? Thanks!

QUESTION 1 5 points Save Answer Go to the Web site of the Federal Reserve Bank of St. Louis (FRED) (http://research.stlouisfed.org/fred2/series/GGSAVE) a) For Gross Government Saving series (GGSAVE) find the most recent value (for the sake of simplicity let this value be 2014Q4) and the value from the same quarter four years earlier (for the sake of simplicity let this value be 2010Q4). Gross governement savings are the equivalent of "sublic savings" discussed in the slides and book. Make sure you type in the -" sign when submitting your answer. if these savings are negative, Gross government savings in 201404 are 261 7 Gross government savings in 2014Q4 are -261.7 billions USD Gross government savings in 201004 are -1044.2 billions USD b) Using the values from part a), explain whether the government budget in each of the two periods is balanced, in a surplus or in a deficit. From the first period to the most recent period, has the government saving increased, decreased or remained constant? What is the dollar change from the first period to the most recent one? From 2010Q4 to 2014Q4 government saving has (increased/decreased) increased by 782.5 billions USD c) In order to provide an answer to this question you need to draw a graph showing the market of loanable funds in equilibrium (make sure you label each axis and each curve). Use this graph to show the effect of the change in government saving that you calculated in part c) on loanable funds market. In doing so, assume that the level of private saving remains unchanged. Although you do not have to report it, the graph is extremely important in guiding your answer. Explain what will happen to the level of investment in the economy? Do you see evidence of private investment crowding out? Where it is the case, pease report only the first two decimals without rounding anything up. Figures without decimals should be reported as they are. Do not use commas as separators for 1000s Throughout the economy the investment level has Do you see evidence of private investment crowding out (Y/N)? Y

Explanation / Answer

a) gross investment is 18.2 at the end of 2014. It has decresed from 2010.

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