Savings, Investment, and Deficits Suppose a country has a closed economy, and at first it has the following macroeconomic data: Real GDP = $800 per year %3D Consumption = $560 per year %3D Tax revenue = $80 per year Government spending = $120 per year %3D Based on the information above, how many dollars of savings are supplied to the country's credit market (national saving)? Enter your answer in the space below. (If your answer is negative, be su to include the minus sign in the answer you enter.)
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- onsider the following data (in billion $) for a country in a particular year: (assume this country has Zero Transfer Payment Personal consumption expenditure (C) 200 Exports (x) 10 Government Purchases of goods and services (G) 120 Imports (m) 15 Gross Domestic Product (Y) 1800 Taxes 20 d. What is the value of gross investment? e. What is the value of net export? f. Is the country lending to or borrowing from rest of the world? g. Dose the government has deficit, balance or surplus budget? h. What is the amount of investment financed by national saving? i. What is the amount of investment financed by borrowing from rest of the world? J. What is the meaning of transfer paymentConsider the following data (in billion $) for a country in a particular year: (assume this country has Zero Transfer Payment Personal consumption expenditure (C) 200 Exports (x) 10 Government Purchases of goods and services (G) 120 Imports (m) 15 Gross Domestic Product (Y) 1800 Taxes 20 d. What is the value of gross investment? e. What is the value of net export? f. Is the country lending to or borrowing from rest of the world? g. Dose the government has deficit, balance or surplus budget? h. What is the amount of investment financed by national saving? i. What is the amount of investment financed by borrowing from rest of the world? J. What is the meaning of transfer paymentConsider the following data referring to any economy that has no foreign relations:GDPmp = 6000Disposable Income of the private sector (DIs.priv.)= 5100Budget Deficit = 200Private consumption = 100 Calculate the amount of:a) Public spending.b) Private savings (Spriv).c) Investment.
- (iii)Explain what is meant by the current account multiplier in relation to a fiscal expansion, giving the appropriate equation.Question Consider that the Ghanaian economy is a small and close, which is characterised by the following. AD=C+I+G+NX C=a+bY* Y*=disposal income T=T0 I=I0 G=G0 Md/P=Ld(Y,i) Ms=money supply ,which is given . AD=Aggregate demand ,C=consumption,G=Government expenditure ,T=Tax,P= Pricelevel,I=Investment,NX=Netexports (a) Consider an increase in Government spending ∆ > .Assume for now that both price and expected price are fixed. Also assume that government does not implement any other policy than the increase in Government spending. What is the effect of this policy on the goods market? (b) What is the effect on equilibrium in the money market? Present your answer in swells labelled diagram, showing both money supply and demand before the policy was implemented, and that after the policy was implemented in the same graph. (c) Solve for equilibrium in the goods market. d) Suppose the policy change is rather a increase in real money supply not a decrease in government spending.What…What will be the effect of “contractionary fiscal policy of abroad” on net export, saving and interest rate? Show your answer with the help of graph and also properly explain
- What will be the effect of “contractionary fiscal policy of home” on net export, saving and interest rate? Show your answer with the help of graph and also properly explainWrite out the equation for desired national savings. What changesto desired national saving and desired national consumption happen whengovernment spending increases, funded by an increase in taxes? Why doesconsumption change by less than G?Question Need help calculating this one. Please show all work. Hints: Equilibrium Condition is S=I. If economy is open r=r*. Assume that in a small open economy where full employment always prevails, national saving is 300. a. If domestic investment is given by I = 400 – 20r, where r is the real interest rate in percent, what would the equilibrium interest rate be if the economy were closed? b. If the economy is open and the world interest rate is 10 percent, what will investment be? c. What will the current account surplus or deficit be? What will net capital outflow be? Assume that in a small open economy where full employment always prevails, national saving is 300. a. If domestic investment is given by I = 400 – 20r, where r is the real interest rate in percent, what would the equilibrium interest rate be if the economy were closed? b. If the economy is open and the world interest rate is 10 percent, what will…
- Suppose the following equations represents a closed economy: Y= C + I + G Y = 4000 G = 500 T = 500 C = 500 + 0.7 (Y – T) I = 1000 – 40r In this economy, compute the value of consumption (C), private saving, public saving, and national saving. Also, find the equilibrium interest rate (r). Now suppose that government spending (G) rises (expansionary fiscal policy) to 300. Compute private saving, public saving, and national saving. Also, find the new equilibrium interest rate (r). In part (b), due to expansionary fiscal policy (increase in government spending), which of the two other components of aggregate demand changes, C or I? Why? (Hint: Note the real interest rate)A closed economy is represented by: Y = C+1+G C = 20+0.85YD G = 300 YD = Y-T T = 0.2Y I = 165-36i Md = 0.5Y-100i M3 = 750 a)Calculate equilibrium values of income and interest rate b)Calculate equilibrium values of income and interest rate if public expenditures increase by 8, enhanced by public debt c)Calculate equilibrium values of income and interest rate if public expenditures increase by 8 is enhance by money supply d)Provide a graphical representation of your resultsGiven the numbers below, a. show that the country has a twin deficit?b. Find the output Y? c. Find the private saving, public saving, and national saving?d. Find the net exports?Tax: T= 500 dollars.Gov’t spending: G= 700 dollars.Disposable income Yd = 900 dollars.Consumption: C= 400 dollars.Investment: I= 500 dollars