Suppose GDP is 10.3 trillion, taxes are 1.8 trillion, private saving is 1.2 trillion and public saving is 0.2 trillion. Assuming this economy is closed, calculate: consumption, government purchases, national saving and investment.

Suppose GDP is 10.3 trillion, taxes are 1.8 trillion, private saving is 1.2 trillion and public saving is 0.2 trillion. Assuming this economy is closed, calculate: consumption, government purchases, national saving and investment.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Savings,investment And The Financial System

Section: Chapter Questions

Problem 4PA

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Concept explainers

Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.

Question

Definition Definition Income earned by a government that is not spent on current expenses, but rather saved for future investments or to pay off debts. It is the difference between government revenue and expenditures, and can be positive or negative.

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