Question

Problem 1 (10 marks)

Suppose GDP equals $300 trillion, consumption equals $24 trillion, the government spends $3 trillion and has a budget deficit of $500 billion.

• Find public saving, taxes, private saving, national saving, and investment.

Problem 2 (10 marks)

You take $500 that you held as currency and put it into the banking system. The reserve ratio is equal to 20%.

1. Calculate the money multiplier.
2. By how much will increase the total amount of deposits in the banking system?
3. By how much will increase the money supply?

Problem 3 (10 marks)

At the begening of 2018, a town has 152,000 employed people and 8000 unemployed people. The remaining 40,000

people in the town are not in the labor force.

Based on these​ numbers:

1. Calculate the​ town's unemployment rate
2. Calculate the​ town's labor force participation rate
3. Calculate Suppose that 10,000 people decide to join the labor force. Of these 10,000 people 7,800 find jobs. What is the unemployment rate at the end of 2018?

Problem 1 (10 marks)

Suppose GDP equals $300 trillion, consumption equals $24 trillion, the government spends $3 trillion and has a budget deficit of $500 billion.

• Find public saving, taxes, private saving, national saving, and investment.

Problem 2 (10 marks)

You take $500 that you held as currency and put it into the banking system. The reserve ratio is equal to 20%.

1. Calculate the money multiplier.
2. By how much will increase the total amount of deposits in the banking system?
3. By how much will increase the money supply?

Problem 3 (10 marks)

At the begening of 2018, a town has 152,000 employed people and 8000 unemployed people. The remaining 40,000

people in the town are not in the labor force.

Based on these​ numbers:

1. Calculate the​ town's unemployment rate
2. Calculate the​ town's labor force participation rate
3. Calculate Suppose that 10,000 people decide to join the labor force. Of these 10,000 people 7,800 find jobs. What is the unemployment rate at the end of 2018?

*** please I do not want answer from internet

Answer 1

Problem 1

GDP = $300 trillion

Consumption = $24 trillion

Government spending = $3 trillion

Budget deficit = $500 billion

Public saving is equal to budget deficit or budget surplus.

Budget deficit implies negative public saving.

So,

The public saving is -$500 billion.

Calculate taxes -

Budget deficit = Government spending - Taxes

Taxes = Government spending - Budget deficit

Taxes = $3 trillion - $500 billion = $2.5 trillion

So,

The taxes is $2.5 trillion.

Calculate Private Saving -

Private Saving = GDP - Consumption - Taxes

Private Saving = $300 trillion - $24 trillion - $2.5 trillion

Private Saving = $273.50 trillion

The private saving is $273.50 trillion

Calculate National Saving -

National Saving = Private saving + Public saving

National saving = $273.50 trillion - $500 billion = $273 trillion

The national saving is $273 trillion.

Investment is equal to national saving.

The investment is $273 trillion.