Suppose GDP in this country is $680 million. Enter the amount for government purchases. National Income...

Suppose GDP in this country is $680 million. Enter the amount for government purchases.

National Income Account	Value
National Income Account	(Millions of dollars)
Government Purchases (GG)
Taxes minus Transfer Payments (TT)	180
Consumption (CC)	300
Investment (II)	180

National Saving (S)	=	Y - C - G
	=	I

Private Saving	=	Y - C - T
	=

Public Saving	=	T - G
	=

Based on your calculations, the government is running a budget .

Solutions

Expert Solution

Answer:

GDP = C + I + G

680 million = 300 million + 180 million + G

G = 680 million - 480 million

G = $ 200 million

National Saving = Private Saving + Public Saving = GDP - C - G = (680 - 300 - 200) million = 180 million

Private Saving = GDP - T - C = (680 - 180 - 300) million = $ 200 million

Public Saving = T - G = (180 - 200) million = -20 million

Since (T - G) < 0, government is running a budget deficit.

Rahul Sunny answered 2 years ago

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