Question

Consider the following information about the international economy of Regalia: GDP = $1,000 million C = $850 million T = $50 million G = $100 million X = $100 million IM = $125 million a. Determine the level of investment spending (1)and private savings (Sp). I = million Sp = $ million b. Determine the budget balance and net capital inflow (NCI). Budget balance = $ million NCI = $ million c. What is the relationship among investment, private saving, the budget balance, and net capital inflow? OI = Sp + (T - G) +(IM - X) O I = Sp + (T-G) + (IM + X) I = Sp - (T - G) + (IM - X) I = Sp + (T + G) + (IM - X)

Answer 1

The level of investment spending in Regalia is $75 million.

Step-by-step explanation:

The formula to calculate GDP is C + I + G + (X - M), where C represents consumption, I represents investment, G represents government spending, X represents exports, and M represents imports.

Given the following information:

• C = $850 million
• I = ??? (To be determined)
• G = $100 million
• X = $100 million
• M = $125 million

We can substitute these values into the GDP formula and solve for I:

• GDP = $1,000 million
• C = $850 million
• T = $50 million
• I = ??? (To be determined)
• G = $100 million
• X = $100 million
• M = $125 million

By rearranging the formula, we can solve for I:

GDP = C + I + G + (X - M)

$1,000 million = $850 million + I + $100 million + ($100 million - $125 million)

$1,000 million = $850 million + I + $100 million - $25 million

$1,000 million = $925 million + I

I = $1,000 million - $925 million

I = $75 million

Therefore, the level of investment spending is $75 million.