Homework Answers
Consumption C = 200 + 0.65*(5000 – 1150) = 2702.50
Investment I = 1000 – 55*6 = 670
Government Spending G = 1000
Taxes = 1150
(Public saving, T – G) = 1150 – 1000 = 150
(Private saving, Y – T – C) = 5000 – 1150 – 2702.50 = 1147.50
(National savings) = 150 + 1147.50 = 1297.50
Net exports = 1128 – 1128e
Now use C + I + G + NX = Y
2702.50 + 670 + 1000 + 1128 – 1128e = 5000
This gives e = 500.50/1128 = 0.4437
Net exports = 627.50
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