Question

In each part that follows, use the economic data given to find national saving, private saving, public saving, and the national saving rate.

a. Household saving = 200     Business saving = 400

     Government purchases of goods and services = 220

     Government transfers and interest payments = 125

     Tax collections = 225     GDP = 2,800

Instructions: Enter your response for the national saving rate rounded to one decimal place. If you are entering any negative numbers, be sure to include a (-) in front of those numbers.

National saving	Private saving	Public saving	National saving rate
			%

b. GDP = 6,300     Tax collections = 1,725

     Government transfers and interest payments = 400

     Consumption expenditures = 4,550

     Government budget surplus = 100

Instructions: Enter your response for the national saving rate rounded to one decimal place. If you are entering any negative numbers, be sure to include a (-) in front of those numbers.

National saving	Private saving	Public saving	National saving rate
			%

c. Consumption expenditures = 4,600     Investment = 1,000

     Government purchases = 1,000     Net exports = 12

     Tax collections = 1,650

     Government transfers and interest payments = 500

Instructions: Enter your response for the national saving rate rounded to one decimal place. If you are entering any negative numbers, be sure to include a (-) in front of those numbers.

National saving	Private saving	Public saving	National saving rate
			%

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Answer 1

a) Public saving = TX-T-G = 225-125-220 = -120

Private saving = Business saving+Household saving = 400+200=600

National saving = Private+public saving = 480

National saving rate = National saving/GDP = 480/2800 =17.1%

b) Public saving = government budget surplus = 100

Private saving = GDP+T-TX-C = 6300+400-1725-4550 = 425

National saving = 100+425 = 525

National saving rate = 525/6300 = 8.3%

c) GDP = C+I+G+NX = 4600+1000+1000+12 = 6612

Public saving = TX-T-G = 1650-500-1000 = 150

Private saving = GDP+T-TX-C = 6612+500-1650-4600 = 862

National Saving = 150+862 = 1012

National savings rate = 1012/6612 = 15.3%