Spain operates in the world economy(open economy). Its economy can be described by the following consumption and investment curves: C(r) = 5000-1000r+0.25Y, I(r) = 500-1800r+0.2Y. Its output is Y = 13250 and the government spending is G = 8000. The world Interest rate is 5%. Before joining the world economy, Spain’s closed economy output is 13000. Question: What is Spain’s current account balance?

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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.