You are given the following information about an economy: Gross private domestic

Question

You are given the following information about an economy:
Gross private domestic investment = 40 Government purchases of goods and services = 30 Gross national product (GNP) = 200 Current accoimt balance = -20 Taxes = 60 Government transfer payments to the domestic private sector = 25 Interest payments from the government to the domestic private sector = 15 (Assume aU interest payments by the government go to domestic households.) Factor income received from rest of world = 7 Factor payments made to rest of world = 9
Find the following, assuming that government investment is zero:
a. Consumption b. Net exports c. GDP d. Net factor payments from abroad e. Private saving/Government saving g. National saving You are given the following information about an economy:
Gross private domestic investment = 40 Government purchases of goods and services = 30 Gross national product (GNP) = 200 Current accoimt balance = -20 Taxes = 60 Government transfer payments to the domestic private sector = 25 Interest payments from the government to the domestic private sector = 15 (Assume aU interest payments by the government go to domestic households.) Factor income received from rest of world = 7 Factor payments made to rest of world = 9
Find the following, assuming that government investment is zero:
a. Consumption b. Net exports c. GDP d. Net factor payments from abroad e. Private saving/Government saving g. National saving

Explanation / Answer

c. GDP = GNP - NFIA = 200 - 2 = 198

d. NFIA = Factor income received from rest of world - Factor payments made to rest of world = 7 - 9 = - 2

e. Private saving = Y - T + TR - C = 198 - 60 + 25 - C = 163 - C

g. National saving = Private saving + Public saving = ( 163 - C) + (T - G) = 163 - C + 60 - 30 = 193 - C

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