Saving and investment in the national income accounts The following table contai

Question

Saving and investment in the national income accounts The following table contains data for a hypothetical closed economy that uses the dollar as its currency. Suppose GDP in this country is dollar 1, 540 million. Enter the amount for government purchases. Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the previous National Saving (5) = million Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table. Private Saving = million Public Saving = million Based on your calculations, the government is running a budget .

Explanation / Answer

Y = $1,540 million

For a closed economy, Y = C + I + G

1540 = 700 + 490 + G

G = 1540 - 700 - 490 = $350 million

National Savings = Income - Consumption - Government purchases

= 1540 - 700 - 350 = $490 million

Private savings = Y - Taxes - C = 1540 - 455 - 700 = $ 385 million

Public savings = T - G = 455 - 350 = $ 105 million

Since Taxes net of transfer payment is greater than government spending, do government is running a budget surplus.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.