Homework Answers
a)
Public saving:
There is a fall in the public saving by the 100 Billion. So saving will decrease by 100 Billion. Government expenditure does not change.
b)
Private saving = MPS*100
= 0.20*100
= 20 Billion.
c)
Public Saving = Private saving + Public Saving.
= 20 + ( -100)
= - 80 Billion fall.
d)
There will be 80 billion fall in the investments.
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