EBK ECONOMICS
4th Edition
ISBN: 8220101443649
Author: KRUGMAN
Publisher: YUZU
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Question
Chapter 25, Problem 5P
To determine
To determine: The taxes as a percentage of GDP, national savings and private savings.
Concept Introduction:
National Savings: It is defined as the sum of private savings and government savings. The formula to calculate National Savings is:
Private Saving: It is the saving made by people for times of emergency or bad financial conditions.
The formula to calculate private saving is:
Here,
- T is tax revenue.
- GDP is
gross domestic product . - C is consumption spending.
Government Saving: It is defined as the saving made by government after deducting all purchases from tax revenue.
The formula to calculate net government saving is:
Government Tax: It is all those money collected by government from direct or indirect taxes.
The formula to calculate net government taxes after government transfers is:
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