Table: Variable 2009 2010 _____________________________________ National Savings
ID: 1252814 • Letter: T
Question
Table:Variable 2009 2010
_____________________________________
National Savings 135 150
Tax Revenue/GDP 0.3 0.3
Net Factor Payments 75 40
Budget Deficit 10 30
GNP 675 840
Transfer Payments 30 35
Current Account Balance -50 25
Interest Payments 20 -10
Here is the table I was given.
The question asked is to find the private savings rate for both years.
I am struggling with: finding the GDP and consumption. I know that private savings = (T + NFP - T + TR +INT) - C, but I don't know how to find the rate. What is the difference?
Explanation / Answer
GDP=GNP-NFP For 2009: GDP=675-75=600 Taxes=600*.3=180 Private Savings=National savings-Government savings Government savings=-Budget Deficit Gov. savings=-10 Private savings=135-(-10)=145 Private Savings=GDP+NFP+TP+INT-T-C 145=600+75+30+20-180-C 145=545-C C=545-145 C=400 But you don't really need to find C. Private savings for 2009 is 145. Private savings rate=(Private savings)/(Private disposable income Private disposable income=GDP+NFP+TP+INT-Taxes=600+75+30+20-180=545 Private savings rate=145/545=26.6% (specifically 26.6056%) For 2010: GDP=840-40=800 Taxes=800*.3=240 Private Savings=National savings-Government savings Government savings=-Budget Deficit Gov. savings=-30 Private savings=150-(-30)=180 Private Savings=GDP+NFP+TP+INT-T-C 180=800+40+35+(-10)-240-C 180=625-C C=625-180 C=445 But, again, you don't really need to find C. Private savings for 2010 is 180. Private savings rate=(Private savings)/(Private disposable income Private disposable income=GDP+NFP+TP+INT-Taxes=800+40+35+(-10)-240=625 Private savings rate=180/625=28.8% (exactly 28.8%) Finished. As for the difference between private savings and private savings rate: Private savings rate is just the private savings as a percentage of private disposable income, as displayed in the solution.
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