Question

Suppose GDP is $9 trillion, taxes are $1.9 Trillion, private saving is $0.6 trillion, and public saving is $0.3 trillion.

Assuming the economy is closed, complete the following table by calculating consumption, government purchases, national saving, and investment.
Consumption__
Government purchases___
National saving _____-
Investment_____

Answer 1

To calculate consumption, government purchases, national saving, and investment, use the equation: Y = C + I + G + NX. Given the values, consumption is $6.2 trillion, investment is $0.9 trillion, national saving is $0.9 trillion, and government purchases is $1.6 trillion.

Step-by-step explanation:

To calculate the missing values, we can use the equation:

Y = C + I + G + NX

where:

Y is GDP

C is consumption

I is investment

G is government purchases

NX is net exports

Given the information, we have:

GDP = $9 trillion

Taxes = $1.9 trillion

Private saving = $0.6 trillion

Public saving = $0.3 trillion

Let's solve for the missing values:

National saving = Private saving + Public saving = $0.6 trillion + $0.3 trillion = $0.9 trillion

Consumption = GDP - National saving - Taxes = $9 trillion - $0.9 trillion - $1.9 trillion = $6.2 trillion

Investment = National saving = $0.9 trillion

Government purchases = Taxes - Public saving = $1.9 trillion - $0.3 trillion = $1.6 trillion