Question

You are given the following information about an economy:

Gross private domestic investment = 40

Government purchases of goods and services = 30

Gross national product (GNP) = 200

Current account balance = (-20) -> negative 20

Taxes = 60

Government transfer payments=25

Interest payments from the government (all to the domestic households) = 15

Factor income received from rest of world = 7

Factor payments made to rest of world = 9

Find the following, assuming that government investment is zero: ( Please provide your work in Word format otherwise I may not recognize your handwriting )

a. Consumption

b. Net exports

c. GDP

d. Net factor payments from abroad

e. Private saving

f. Government saving

g. National saving

Answer 1

a) GDP = 200-(7-9) = 202

NX=-20-(-2) = -18

Y=C+I+G+NX

C= 202-(40+30-18) = 150

b) NX=CA-Net factor payment = -20-(-2) = -18

c) GDP = Gross national product-Net factor payment = 200-(-2) = 202

d) NFP = 7-9 = -2

e)PS = Y+NFP-T+TR+I-C = 202-2-60+25+15 - 150 = 30

f) GS = T-TR-I-G = 60-25-15-30 = -10

g) NS = Private saving+government saving = 30+(-10) = 20