In a closed economy, GDP is $1000, government purchases are $200, and consumption is $700. If the government has a budget surplus of $25, what are investment, taxes, private saving, and national saving? Explain with equations
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In a closed economy,
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- Economists often argue that a large increase in government purchases – such as for the military – will crowd out private-sector spending. Use the investment-saving diagram to defend or to refute their premise.If consumption expenditures are $1800 million, gross investment is $450 million, imports are $350 million, exports are $180 million, government expenditure on goods and services is $120 million, and government transfer payments are $180 million and net taxes are $250 million; a) Calculate the GDP. b) Is there budget deficit or surplus? Calculate. c) How much is the private (household) saving? d) How much is the disposable income? e) Calculate the national savings.In a closed economy, GDP is $1000, government purchases are $200, consumption is $700 and the government has a budget surplus of $25. Using the given information calculate: a) investment, b) taxes, c) public saving.
- If consumption expenditures are $1800 million, gross investment is $450 million, imports are $350 million, exports are $180 million, government expenditure on goods and services is $120 million, and government transfer payments are $180 million and net taxes are $250 million; a) Calculate the GDP. b) Is there budget deficit or surplus? Calculate. c) How much is the private (household) saving? d) How much is the disposable income?Show on a graph of the market for saving and investment the effect of the following. (The graph is a basic savings and investment graph). In an effort to improve fiscal conditions, policymakers raise taxes. This results in lower disposable income. Real interest rate (percent per year) 10. 8 6 4 2 SLF 0 1.2 1.4 1.6 DLF 2.0 2.2 1.8 Loanable funds (trillions of 2009 dollars) The savings function [Select] The investment function [Select] The real interest rate [Select] The level of savings and investment [Select]If private investment increases by $1, real GDP increases by $4. What do we call this in economics? Can you explain why this might happen?
- Use the information below to answer the following questions. Suppose that in China, investment is ¥190 billion, saving is ¥170 billion, government expenditure on goods and services is ¥195 billion, exports are V230 billion, and imports are *270 billion (Y is yuan, the currency of China). The government received billion in tax revenues. The government has a budget investment by and investment. equal to billion which is exerting a(n) the demand for loanable funds, which influence on the real interest rateIn a closed economy, what determines consumption, investment, and government expenditures? Please include in your answer the form of the consumption function, investment function, and government expenditure function.If consumption expenditures are $1800 million, gross investment is $450 million, imports are $350 million, exports are $180 million, government expenditure on goods and services is $120 million, and government transfer payments are $180 million and net taxes are $250 million; a) Calculate the GDP. b) Is there budget deficit or surplus? Calculate. c) How much is the private (household) saving?
- Suppose the GDP is $8 trillion, taxes are $1.5 trillion, private saving is $0.5 trillion, and public saving is $0.2 trillion. assuming this economy is closed, calculate consumption, government purchases national saving, and investment. b. imagine that government start with a balanced budget and then, because of an increase in taxes, start running a budget surplus. graphically analyze the effects of the budget surplus on interest rate, saving and investment if loanable funds means the flow of resources available from private savingSuppose the economy goes into a recession and private households wish to save more while businesses wish to invest less. Suppose that at the same time Congress wishes to 'get its fiscal house in order' and balance the federal budget. (Assume there is no foreign trade.) According to the lectures, which of the following is not possible. Households (in the aggregate) successfully save more than intended investment while the federal government successfully balances the budget. Increased leakages through savings and taxes, compounded by decreased government and investment spending, create a 'paradox of thrift' situation The government successfully balances the budget O Congress is surprised that higher taxes and lower outlays actually increased the federal deficit The private sector runs a 'surplus', saving more than it investsScenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes. This change in spending causes the government to run a budget which national saving. Shift the appropriate curve on the graph to reflect this change. This causes the interest rate to the level of investment spending.