Question

In each part that follows, use the economic data given to find national saving, private saving, public saving, and the national saving rate .

a.
Household saving = 200
Business saving = 400
Government purchases of goods and services = 100
Government transfers and interest payments = 100
Tax collections = 150
GDP = 2,200
b.
GDP = 6,000
Tax collections = 1,200
Government transfers and interest payments = 400
Consumption expenditures = 4,500
Government budget surplus = 100
c.
Consumption expenditures = 4,300
Investment = 1,000
Government purchases = 1,000
Net exports = 6
Tax collections = 1,575
Government transfers and interest payments = 500

Answer 1

a. National saving = 150, Private saving = -50, Public saving = -50, National saving rate = 6.82%. b. National saving = -5816, Private saving = 800, Public saving = -5816. c. National saving = 3369, Private saving = 3300, Public saving = 69. The national saving rates are 6.82%, N/A%, and 78.35% respectively.

Step-by-step explanation:

a. To find national saving, we need to calculate the sum of private saving and government saving. National saving = Private saving + Government saving. In this case, private saving is 200 and government saving is (Tax collections - Government purchases - Government transfers and interest payments). So, government saving = 150 - 100 - 100 = -50. Therefore, national saving = 200 - 50 = 150.

To find private saving, we subtract government purchases and government transfers and interest payments from tax collections. Private saving = Tax collections - Government purchases - Government transfers and interest payments. So, private saving = 150 - 100 - 100 = -50.

Public saving is the difference between tax collections and government purchases and transfers. Public saving = Tax collections - Government purchases - Government transfers and interest payments. So, public saving = 150 - 100 - 100 = -50.

The national saving rate can be calculated by dividing national saving by GDP and multiplying by 100. National saving rate = (National saving / GDP) x 100. Substituting the values, national saving rate = (150 / 2200) x 100 ≈ 6.82%.

b. In this case, national saving = (Tax collections - Government transfers and interest payments) - (Consumption expenditures + Government purchases + Net exports) = (1200 - 400) - (4500 + 1000 + 6) = -5816. Private saving = Tax collections - Government transfers and interest payments = 1200 - 400 = 800. Public saving = (Tax collections - Government transfers and interest payments) - (Consumption expenditures + Government purchases + Net exports) = (1200 - 400) - (4500 + 1000 + 6) = -5816.

c. To find national saving, we need to calculate the sum of private saving and public saving. National saving = Private saving + Public saving. In this case, private saving is (Consumption expenditures - Investment) = 4300 - 1000 = 3300 and public saving is (Tax collections - Government transfers and interest payments) - (Government purchases + Net exports) = 1575 - 500 - 1000 - 6 = 69. Therefore, national saving = 3300 + 69 = 3369.

To find private saving, we subtract investment from consumption expenditures. Private saving = Consumption expenditures - Investment. So, private saving = 4300 - 1000 = 3300.

Public saving is the difference between tax collections and government transfers and interest payments, government purchases, and net exports. Public saving = (Tax collections - Government transfers and interest payments) - (Government purchases + Net exports). So, public saving = (1575 - 500) - (1000 + 6) = 69.

The national saving rate can be calculated by dividing national saving by GDP and multiplying by 100. National saving rate = (National saving / GDP) x 100. Substituting the values, national saving rate = (3369 / 4300) x 100 ≈ 78.35%.