Answered: For a closed economy, GDP is $10,…

For a closed economy, GDP is $10, consumption is $8, taxes are $1, and the buget deficit is $1, What are private saving and national saving? a. $2 and $1 O b. $1 and $2 O c. $1 and $0 O d. $1 and $1

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Savings,investment And The Financial System

Section: Chapter Questions

Problem 4PA

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Concept explainers

Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.

Question

For a closed economy, GDP is $10, consumption is $8, taxes are $1, and the buget deficit is $1, What are private saving and national saving? a. $2 and $1 O b. $1 and $2 O c. $1 and $0 O d. $1 and $1

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Step 1: Deciphering Savings in a Closed Economy

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Step 2: Calculating Private and National Savings

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Table 2. The following table presents information about a closed economy whose market for loanable funds is in equilibrium. GDP Consumer Spending Taxes Minus Transfers Government Purchases $8.5 trillion $5.2 trillion $1.5 trillion $0.7 trillion Refer to Table 2. The quantity of private saving is O a. $2.6 trillion. O b. $1.8 trillion. Oc. $0.8 trillion. O d. $1.1 trillion.
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The following national accounting data are available for an economy for 2020. $ Billion GDP 950 Household Consumption Government Consumption 650 150 Government Investment Direct and Indirect Taxes 170 Subsidies by government 20 Government Transfer Payments 30 Government Interest Payments 10 Retained Earnings Net Exports What is the level of national saving in this economy? Select one: а. 250 O b. 210 O c. 190 d. 200 e. 150
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The diagram below show the market for financial capital assuming that national income is constant at Y*. Suppose national saving is reflected by NS and investment demand is reflected by 10. If the real interest rate is i3, there is which will drive the interest rate up until it reaches i * A. an excess supply of national saving O B. an excess demand for private saving C. an excess demand for financial capital D. an excess supply of financial capital O E. an excess demand for investment O F. an excess supply of public saving Real Interest Rate i ₂ Bug NS0 Quantity of financial capital ($) NS1 18
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