Final answer:
The closed economy's public savings amount to $0.7 trillion, indicating a national budget surplus. If this trend continues, the national debt is expected to decrease. The private savings also amount to $0.7 trillion, making the national savings $1.4 trillion. The quantity of loanable funds demanded in equilibrium would also be $1.4 trillion.
Step-by-step explanation:
Considering the following table containing information about a closed economy, with a GDP of $7.3 trillion, Consumer Spending of $5.2 trillion, Government purchases of $0.7 trillion, and Tax revenue of $1.4 trillion, several calculations can be made to understand the economy's fiscal condition.
To calculate the economy's public savings, we subtract government purchases from tax revenue, which is $1.4 trillion - $0.7 trillion = $0.7 trillion. This indicates that the national budget is in surplus, as tax revenues exceed government expenditures.
If this is a consistent trend, we should expect the national debt to decrease over time, since a budget surplus allows a country to pay down existing debt.
The economy's private savings is calculated by subtracting consumer spending from after-tax income (GDP - taxes), which is $7.3 trillion - $1.4 trillion - $5.2 trillion = $0.7 trillion. The national savings is the sum of public and private savings, which totals to $0.7 trillion + $0.7 trillion = $1.4 trillion in this case.
Assuming that the market for loanable funds is in equilibrium, the quantity demanded of loanable funds would equal the national savings, which is $1.4 trillion, since in a closed economy, savings is equal to investment.