4. What are national savings S = Sp + Sg ? [Your answer should just be a number, i.e. should not feature x.] 6. Suppose Friday’s individual private savings are equal to $500. What are government savings Sg? Preamble for Questions 7-8. Consider two changes to the economy. Suppose that, of the 120 fish that Crusoe was eating, he instead only eats 80 fish and buries 40 in the ground to keep for next year. Suppose also that Friday exports 10 of the fishing rods he makes and keeps only 20. These are the only changes to the economy as originally described. 8. With these changes, what then would be the value of national savings S = Sp + Sg ?
Please help with #4, #6, and #8.
Preamble for Questions 1-8. Consider a fish/fishing rod economy, with Crusoe and Friday the entire population. The local currency is the dollar, and the prices of a fish and a fishing rod are $3 and $45 respectively. Over the year Friday spends all his time making fishing rods for himself, Crusoe all his time fishing (by tickling them). Over the year Friday successfully completes 30 fishing rods (which Friday keeps) and Crusoe catches 600 fish. Each man eats 10 fish per month; Friday borrows his 120 fish from Crusoe over the year, and will repay Crusoe with 138 fish next year. They form a government to which each contributes $x in taxes, where x is some number; the government buys 80 fish from Crusoe to feed to the governmental wolfhound, Gelert. Any fish that Crusoe catches that he does not eat, lend to Friday or sell to the government, he sells to a neighbouring island (i.e. abroad).
4. What are national savings S = Sp + Sg ? [Your answer should just be a number, i.e. should not feature x.]
6. Suppose Friday’s individual private savings are equal to $500. What are government savings Sg?
Preamble for Questions 7-8. Consider two changes to the economy. Suppose that, of the 120 fish that Crusoe was eating, he instead only eats 80 fish and buries 40 in the ground to keep for next year. Suppose also that Friday exports 10 of the fishing rods he makes and keeps only 20. These are the only changes to the economy as originally described.
8. With these changes, what then would be the value of national savings S = Sp + Sg ?
According to the conditions given
Price of per fish =$3
Price of per fishing rod=$45
In a year Friday completes 30 fishing rods which he keeps to himself
$45x30=$1350
In a year Crusoe catches 600 fishes out of which he keeps 120 fish for his own consumption for whole year
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