The following table contains data for a hypothetical closed economy which uses t

Question

The following table contains data for a hypothetical closed economy which uses the dollar as Its currency. Enter the amount for Government Purchases (G). Complete the following table by selecting national income accounting identities to calculate national saving. In your calculations, use data from the Data Table. Complete the following table by selecting national income accounting identities to calculate private and public saving. In your calculations, use data from the Data Table. Based on your calculations, the government is running a budget___.

Explanation / Answer

National Savings = Y – C – G = 2600 – 1300 – 0 = $1300

Or

National savings = Private saving + public savings = 500 + 800 = $1300         

Private savings = Y-T-C   = 2600 – 800-1300 = $500

Public Savings = T-G = 800 – 0 = $800

Government is running a budget surplus.

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