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 $1, 330 million. Enter the amount for investment. Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the previous table. 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.

Explanation / Answer

Investment (I) = GDP - Government Purchases - Consumption

Investment (I) = 1330 - 350 - 700

Investment (I) = $ 280 Million

Private Savings = GDP - Consumption - Taxes

= 1330 - 700 - 455

= $ 175 Million

Public Savings = Taxes - Government Purchases

= 455 - 350

= $ 105 Million

National Savings = Private Savings + Public Savings

= 175 + 105 = $ 280 Million

Government is running a budget Surplus.

Conclusion:-

Investment (I) $ 280 Million Public Savings $ 105 Million Private Savings $ 175 Million National Savings $ 280 Million

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