Question

Suppose the following information describes the economy: Household saving 300 Business saving 700 Government purchases 1,000 Government transfers and interest payments 500 Government tax collections 1,500 GDP 5,000 Public saving equals ____and national saving equals ____.

Answer 1

$1,000; $1,000

Step-by-step explanation:

Given that,

Household saving = $300

Business saving = $700

Government purchases = $1,000

Government transfers and interest payments = $500

Government tax collections = $1,500

GDP = $5,000

Public saving:

= Government tax collections - Government purchases - Government transfers and interest payments

= $1,500 - $1,000 - $500

= $0

Private savings:

= Household saving + Business saving

= $300 + $700

= $1,000

National savings:

= Public saving + Private saving

= $0 + $1,000

= $1,000