2. Saving and investment in the national income accounts The following table con

Question

2. 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 st1,330 million. Enter the amount for government purchases. Value National Income Account(Millions of dollars) Government Purchases (G) Taxes minus Transfer Payments (T) Consumption (C) Investment () 455 700 280 Complete the following table by using national income accounting preceding table. National Saving (S) identities to calculate national saving. In your ca million F6

Explanation / Answer

GDP(Y) = C+I+G
1330 = 700+280+G
G = 350
T = 455

National saving = Private saving + Public saving = 175+105 = 280

Private saving = (Y-T)-C = (1330-455)-700 = 175
Public saving = T-G = 455-350 = 105

Budget surplus/Deficit = Tax-Government spending = 455-350 = 105 which is surplus budget

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