Answer:
A. Private Savings =
Step-by-step explanation:
Requirement A:
Private savings states that how much money resident people can save in an economy.
We know, Private savings = Income of residents (Y) + Transfers (TR) - Consumption (C) - Tax (T)
Given,
Y = $15 Trillion; TR = $2 Trillion; C = $8 Trillion; T = $2 Trillion.
Therefore, private savings = $(15 + 2 - 8 - 2)
Private savings = $7 Trillion.
Requirement B
Public savings dictates that the saving from the government throughout a period in an economy.
We know, Public savings = Government revenue (T) - Government spending (G) - Transfers (TR)
As we do not have spending amount, we have to use althernative formula to find public savings.
Therefore, National Savings (I) = Public Savings + Private savings
Public Savings = National Savings - private savings;
Public Savings = ($2 - $7) Trillion (Private savings from requirement A).
Public savings = - $5 Trillion.
Requirement C;
Government purchase is the government spending throughout a specific time span. It can be calculated through the use of public savings formula. That is:
Public Savings = Government revenue (T) - Government spending (G) - Transfers (TR)
From Requirement B, we get, Public savings = $5 trillion
Therefore, public savings = $2 - G - $2
Or, - $5 = G
Or, G = - $5
Requirement D:
From the requirements B and C, it can be easily said that the government is in Budget deficit. When the spending of any economy of a country is more than that country's tax revenue, it is called budget deficit of the country's economy. It means the government is spending more and a negative savings plan.
Budget deficit = Government spending - Tax revenue = $(5 - 2) = $3 trillion.