Question

Consider the following data for a closed economy Y = $15 trillion C = $9 trillion 1 = $1 trillion TR = $1 trillion T = $4 trillion Use the data to calculate the following. (Enter your responses as integers.) a. Private saving: $ trillion. b. Public saving: $ trillion. c. Government purchases: $ trillion d. The government budget balance is $ trillion and as a result the government budget is in surplus balance deficit

Answer 1

For a closed economy, Y = Ct It G By substituting values, 15= 9+ 1 ta G = 15-10 = $5 trillion © Covernment purchase (6) - $ 5 trillion @ Private saving = Y-T-C. = 15 -4 -9 - $2 trillion, 6 Public saving = T G = 4-5 = $-1 trillion @ Gout Budget Balance = T-G = 4-5=-1 trillion Hence, deficit Answers @ $2 trillion 6 $-1 trillion d) $ - 1 trillion deficit © $5 trillion