Answered: The following table contains data for a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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

Suppose GDP in this country is $1,175 million. Enter the amount for government purchases.

National Income Account	Value
Government Purchases (GG)
Taxes minus Transfer Payments (TT)	225
Consumption (CC)	625
Investment (II)	300

Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the 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, use data from the initial table.

Private Saving	=
	=	$ million

Public Saving	=
	=	$ million

Based on your calculations, the government is running a budget (a. surplus, b. deficit).

---

**Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table.**

### National Saving (S) =

Choose from the dropdown options:

- $ Y - T - G $
- $ G - T $
- $ Y - C - G $
- $ Y - C $

\[
= \_\_\_\_\_ \text{ million}
\]

---

**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
\[
= \_\_\_\_\_ \text{ million}
\]

### Public Saving
\[
= \_\_\_\_\_ \text{ million}
\]

---

**Based on your calculations, the government is running a budget** \_\_\_\_\_.

---

**Explanation:**

- You need to select the appropriate formula for national saving from the dropdown options.
- Input the calculated amounts for private and public saving based on your selected data.
- Determine the budget status of the government (e.g., surplus or deficit) based on your calculations.

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

**Suppose GDP in this country is $1,175 million. Enter the amount for government purchases.**

| **National Income Account** | **Value** *(Millions of dollars)* |
|-----------------------------|-----------------------------------|
| Government Purchases (G) | |
| Taxes minus Transfer Payments (T) | 225 |
| Consumption (C) | 625 |
| Investment (I) | 300 |

In this table, the government purchases (G) need to be calculated. Given that the GDP is $1,175 million, use the GDP formula for a closed economy:

\[ \text{GDP} = C + I + G \]

Substitute the given values:

\[ 1,175 = 625 + 300 + G \]

Solving for G will provide the amount of government purchases.

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