Final answer:
National Savings Supplied (NS) is calculated by subtracting consumption (C) from potential GDP (Y*) in a balanced budget scenario. Since the provided functions and the question suggests a balanced budget, NS equals potential GDP minus consumption at the potential GDP level.
Step-by-step explanation:
The student's question deals with determining the National Savings Supplied (NS) in the Long-Run equilibrium for an economy given certain consumption (C), investment (I), government spending (G), and net exports (NX) functions, along with the potential GDP (Y*). National Savings in the context of macroeconomics is defined as the sum of private savings and government savings (the budget surplus, which is the difference between tax revenues and government spending). Based on the provided information, the equilibrium national income (Y) should equal the potential GDP (Y*).
To calculate the National Savings Supplied, we need to take into account the budget surplus or deficit (government savings), which is T-G, and the private savings, which is Y-C-T where T represents taxes. Since tax rates are not directly provided, we assume that T equals G, which simplifies to a balanced government budget scenario, meaning government savings is zero. Therefore, National Savings Supplied can be calculated with the formula NS = Y - C when the budget is balanced. In this case, since we are not given a value for taxes and we assume it to be balanced with G, NS = Y* - C, where C has a constant component and a part that depends on Y.
Using the student's provided potential GDP and consumption function, NS can be calculated as follows:
NS = Y* - (Consumption at Y*)
NS = 7,000 - (500 + 0.48 × 7,000)
After calculating, the result would give us the National Savings Supplied in the Long-Run equilibrium.