Ask Question
9 January, 05:55

Suppose GDP is $8 trillion, taxes are $1.5 trillion, private saving is $0.5 trillion, and public saving is $0.2 trillion. Assuming this economy is closed, calculate consumption, government purchases, national saving, and investment.

+4
Answers (1)
  1. 9 January, 09:00
    0
    Answer: Consumption = $6 trillion

    government purchases = $1.3 trillion

    national saving = $0.7 trillion and

    investment = $0.7 trillion

    Explanation:GDP is the market value of all final goods and services within an economy during a given period.

    GDP = Consumption + Investment/National Savings + Government Expenditure/purchases (in a closed economy)

    National Savings / Investment = Private saving + public saving = $0.5 trillion + $ 0.2 trillion = $0.7 trillion.

    Government purchases = Taxes - Public saving = $1.5 trillion - $0.2 trillion = $1.3 trillion

    Since, GDP = Consumption + Investment/National Savings + Government Expenditure/purchases (in a closed economy)

    Therefore, Consumption = GDP - Investment - Government Expenditure

    Consumption = $8trillion - $0.7trillion - $1.3trillion = $6 trillion
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Suppose GDP is $8 trillion, taxes are $1.5 trillion, private saving is $0.5 trillion, and public saving is $0.2 trillion. Assuming this ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers