Savings, Investment, and the Financial System - End of Chapter Problems1. Given the following information about the closed economy of Brittania, what is the level of investment spending andprivate savings, and what is the budget balance? Assume there are no government transfers.GDP $1400.00 millionC $840.00 millionT $310.00 millionG $280.00 millionI- $millionPrivate savings $millionBudget balance $millionNational savings $million

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Asked Oct 20, 2019
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Savings, Investment, and the Financial System - End of Chapter Problems
1. Given the following information about the closed economy of Brittania, what is the level of investment spending and
private savings, and what is the budget balance? Assume there are no government transfers.
GDP $1400.00 million
C $840.00 million
T $310.00 million
G $280.00 million
I- $
million
Private savings $
million
Budget balance $
million
National savings $
million
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Savings, Investment, and the Financial System - End of Chapter Problems 1. Given the following information about the closed economy of Brittania, what is the level of investment spending and private savings, and what is the budget balance? Assume there are no government transfers. GDP $1400.00 million C $840.00 million T $310.00 million G $280.00 million I- $ million Private savings $ million Budget balance $ million National savings $ million

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Expert Answer

Step 1

Given – GDP = $1400M , T = $310M , C = $840M , G= $280M (M=million)

For closed economy:

GDP = C + I + G

1400 = 840 + I + 280

Or, I = $280 M

Step 2

Private Savings (PS) = GDP – C – T

PS = 1400 – 840 – 310

PS = $250 M

Step 3

Budget balance = T- G = 310 – 280

Budget balance = $30 M

Therefore, t...

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