Ask Question
28 April, 20:28

The country of Hykenia does not trade with any other country. Its GDP is $20 billion. Its government collects $4 billion in taxes and pays out $3 billion to households in the form of transfer payments. Consumption equals $15 billion and investment equals $2 billion. What is public saving in Hykenia, and what is the value of the goods and services purchased by the government of Hykenia?

+5
Answers (1)
  1. 28 April, 23:37
    0
    Answer: - $2 billion and $3 billion

    Explanation:

    Government spending

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

    Since it's a closed economy, there will be no export or import

    GDP = C + I + G

    Where GDP is $20 billion

    Investment (I) is $2 billion

    G is Government spending

    GDP = C + I + G

    20=15 + 2 + G

    20 = 17 + G

    Make G the subject of the formula

    G = 20 - 17

    G = $3 billion

    In a closed economy, public saving is known as budget surplus/deficit ie (T-G-TR)

    Where T is tax

    G is Government expenditures on goods and services

    TR is Transfer payments

    Public saving = T - G - TR

    Public saving=$4bn - $3bn - $3bn

    Public saving = - $2 billion.

    It's a budget deficit.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The country of Hykenia does not trade with any other country. Its GDP is $20 billion. Its government collects $4 billion in taxes and pays ...” in 📘 Law 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