The following table contains data for a hypothetical closed economy that uses th

Question

The following table contains data for a hypothetical closed economy that uses the dollar as its currency.

Suppose GDP in this country is $1,680 million. Enter the amount for investment.

The National Saving (S) =

Y - T - G (or)

Y - C (or)

Y - C - G (or)

G - T

Then the second-row of National saving options are:

C (or)

Y (or)

G (or)

I

= $_____million

The Private Saving =

Y - C - T (or)

C - T (or)

Y - T - I (or)

T - G

= $______million

The Public Saving =

T - G (or)

Y - T - I (or)

Y - C - T (or)

C - T

= $________million

Based on your calculations, the government is running a budget of deficit or surplus

Explanation / Answer

Calculate Investment -

Investment = GDP - Government purchases - Consumption

Investment = $1,680 million - $350 million - $875 million

Investment = $455 million

The investment is $455 million.

Calculate National Saving -

National Saving (S) = Y - C - G

National Saving (S) = I

National Saving (S) = $455 million

Calculate Private Saving

Private Saving = Y - C - T

Private Saving = $1,680 million - $875 million - $420 million

Private Saving = $385 million

Calculate Public Saving -

Public Saving = T - G

Public Saving = $420 million - $350 million

Public Saving = $70 million

Positive value of public saving means that government is having budget surplus.

So,

Based on your calculations, the government is running a budget surplus.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

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