Suppose GDP in this country is $320 million. Enter the amount for consumption. Value National Income Account (Millions of dollars) Government Purchases (G) 100 Taxes minus Transfer Payments (T) 110 Consumption (C) Investment (I) 70 Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use da preceding table. National Saving (S) $ million Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, the initial table.
Suppose GDP in this country is $320 million. Enter the amount for consumption. Value National Income Account (Millions of dollars) Government Purchases (G) 100 Taxes minus Transfer Payments (T) 110 Consumption (C) Investment (I) 70 Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use da preceding table. National Saving (S) $ million Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, the initial table.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![**National Income Accounting for Private and Public Saving**
---
**Instructions:**
Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table.
---
### Private Saving
\[ \text{Private Saving} = \]
\[ = \$ \_\_\_\_ \text{ million} \]
---
### Public Saving
\[ \text{Public Saving} = \]
\[ = \$ \_\_\_\_ \text{ million} \]
---
Based on your calculations, the government is running a budget \[ \_\_\_\_ \] .
---
**Explanation of Terms:**
- **Private Saving**: The portion of household income that is not used for consumption or paying taxes. It can be calculated using national income accounting formulas, usually involving personal income, consumption expenditures, and taxes.
- **Public Saving**: The difference between tax revenue collected by the government and government spending. It determines whether the government is running a budget surplus (positive public saving) or a budget deficit (negative public saving).
- **Budget**: This term typically refers to either a budget surplus or budget deficit, indicating whether the government is saving money or spending more than its revenue.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F353d9390-9d86-4b30-b14b-c5063d2ffce9%2F08e300bc-7e0b-4ab5-8c4e-d61acf81545f%2Fz6n7srg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**National Income Accounting for Private and Public Saving**
---
**Instructions:**
Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table.
---
### Private Saving
\[ \text{Private Saving} = \]
\[ = \$ \_\_\_\_ \text{ million} \]
---
### Public Saving
\[ \text{Public Saving} = \]
\[ = \$ \_\_\_\_ \text{ million} \]
---
Based on your calculations, the government is running a budget \[ \_\_\_\_ \] .
---
**Explanation of Terms:**
- **Private Saving**: The portion of household income that is not used for consumption or paying taxes. It can be calculated using national income accounting formulas, usually involving personal income, consumption expenditures, and taxes.
- **Public Saving**: The difference between tax revenue collected by the government and government spending. It determines whether the government is running a budget surplus (positive public saving) or a budget deficit (negative public saving).
- **Budget**: This term typically refers to either a budget surplus or budget deficit, indicating whether the government is saving money or spending more than its revenue.
![### National Income Accounting Exercise
**Objective:**
Calculate the amount for consumption, national saving, and private saving using the given national income accounts.
---
#### Given Data:
- **Gross Domestic Product (GDP):** $320 million
---
#### National Income Account Values:
| **Account** | **Value (Millions of dollars)** |
|------------------------------------|---------------------------------|
| Government Purchases (G) | 100 |
| Taxes minus Transfer Payments (T) | 110 |
| Consumption (C) | [Input Required] |
| Investment (I) | 70 |
---
### Part 1: Calculate Consumption (C)
Using the national income accounting identity:
\[ GDP = C + I + G + (X - M) \]
Assuming no net exports (X - M = 0):
\[ GDP = C + I + G \]
Given:
\[ GDP = 320 \]
\[ I = 70 \]
\[ G = 100 \]
Calculate Consumption (C):
\[ 320 = C + 70 + 100 \]
\[ 320 = C + 170 \]
\[ C = 150 \]
---
### Part 2: Calculate National Saving (S)
National saving (S) is defined as:
\[ S = GDP - C - G \]
Using the computed consumption (C):
\[ S = 320 - 150 - 100 \]
\[ S = 70 \]
**Table Entry:**
- National Saving (S) = $70 million
---
### Part 3: Calculate Private Saving
Private saving is calculated by:
\[ \text{Private Saving} = GDP - T - C \]
Given data:
\[ GDP = 320 \]
\[ T = 110 \]
\[ C = 150 \] (computed in Part 1)
Calculate Private Saving:
\[ \text{Private Saving} = 320 - 110 - 150 \]
\[ \text{Private Saving} = 60 \]
**Table Entry:**
- Private Saving = $60 million
---
### Conclusion:
- **Calculated Consumption (C):** $150 million
- **National Saving (S):** $70 million
- **Private Saving:** $60 million](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F353d9390-9d86-4b30-b14b-c5063d2ffce9%2F08e300bc-7e0b-4ab5-8c4e-d61acf81545f%2F39iuu2i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### National Income Accounting Exercise
**Objective:**
Calculate the amount for consumption, national saving, and private saving using the given national income accounts.
---
#### Given Data:
- **Gross Domestic Product (GDP):** $320 million
---
#### National Income Account Values:
| **Account** | **Value (Millions of dollars)** |
|------------------------------------|---------------------------------|
| Government Purchases (G) | 100 |
| Taxes minus Transfer Payments (T) | 110 |
| Consumption (C) | [Input Required] |
| Investment (I) | 70 |
---
### Part 1: Calculate Consumption (C)
Using the national income accounting identity:
\[ GDP = C + I + G + (X - M) \]
Assuming no net exports (X - M = 0):
\[ GDP = C + I + G \]
Given:
\[ GDP = 320 \]
\[ I = 70 \]
\[ G = 100 \]
Calculate Consumption (C):
\[ 320 = C + 70 + 100 \]
\[ 320 = C + 170 \]
\[ C = 150 \]
---
### Part 2: Calculate National Saving (S)
National saving (S) is defined as:
\[ S = GDP - C - G \]
Using the computed consumption (C):
\[ S = 320 - 150 - 100 \]
\[ S = 70 \]
**Table Entry:**
- National Saving (S) = $70 million
---
### Part 3: Calculate Private Saving
Private saving is calculated by:
\[ \text{Private Saving} = GDP - T - C \]
Given data:
\[ GDP = 320 \]
\[ T = 110 \]
\[ C = 150 \] (computed in Part 1)
Calculate Private Saving:
\[ \text{Private Saving} = 320 - 110 - 150 \]
\[ \text{Private Saving} = 60 \]
**Table Entry:**
- Private Saving = $60 million
---
### Conclusion:
- **Calculated Consumption (C):** $150 million
- **National Saving (S):** $70 million
- **Private Saving:** $60 million
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