Question

The following table contains data for a hypothetical closed economy that uses the dollar as its currency.

Suppose GDP in this country is $925 million. Enter the amount for consumption.

National Income Account	Value
	(Millions of dollars)
Government Purchases (GG)	250
Taxes minus Transfer Payments (TT)	200
Consumption (CC)
Investment (II)	175

Fill the blank above for Consumption(CC)

Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table.

National Saving (S)National Saving (S)	=  =
	=  =
		million

Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table.

Private SavingPrivate Saving	=  =
	=  =	million

Public SavingPublic Saving	=  =
	=  =	million

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

Answer 1

We know Y=C+I+G

Thus 925=CC+175+250=CC+425

Thus CC=925-425=500

national saving=Y-C-G=925-500-250=925-750=175

private saving=Yd-C=925-200-500=225

public saving=Taxes - Govt exp.=200-250=-50

Givernment is running a budget deficit of $50

all above figures are in million