Question

Hi,

Please give me the steps to calculate this problem:

A Table showing :

S(H)=5%

I=11%

T=11%

S(B)=16%

G=18%

1/ What is Aggregate Savings?

2/ What is Current Account?

3/ Does the US has a Surplus on its financial account?

Answer 1

Here,you need more information to solve this problem,

(1) For Aggregate saving Formula is :

Y = C + I

In which, Y = Value of aggregate output

C = Consumable Expenditure

I = Investment Expenditure

(2) For Current account formula is:

CA=( X - M ) + NY + NCT

In which, CA = Current Account

X = Export of Goods and services

M = Import of Goods and services

NY = Net Income from Abroad

NCT = Net Current Transfer

(3) To know The US Surplus on its Financial account Formula is :

Public Saving = T - G

In which, T = Tax revenue

G = Government spending

when Government has Higher Taxation (T) than Government spending ( G ) than it is called Budget surplus,

when  Government spending ( G ) is more than Tax Revenue  than it is called Budget Deficit,

If Tax revenue and Government spending are Equal ,it is called Balanced Budget.

Here we have T = 11 %   

G = 18%

Public Saving = T - G

=11 - 18

= -7%

Here Government spending ( G ) is more than Tax Revenue  

US has Budget Deficit on its Financial account