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Using the information given below for the fictitious country "Alpha," find national saving, private saving, public saving, and the national saving rate.
Household saving = 200, Business saving = 300, Government purchases of goods and services = 80, Government transfers and interest payments = 100, Tax collections = 220, and GDP = 1,800.

Respuesta :

Answer:

Answer in explanation

Explanation:

We calculate each of the metrics for the country Alpha using the appropriate formula;

National saving

Mathematically, National saving = Public saving + Private saving

Private saving = Total income - Tax Revenue - Consumption or Y - T - C or household + Business savings = 200 + 300 = 500

Public saving

Mathematically, Public saving = Tax revenue - expenditures = T - G = 220 - (80 + 100) = 40

National saving is thus: 500 + 40 = 540

National saving rate

Mathematically, National saving rate = (National saving * 100)/GDP = (540 * 100)/1800 = 30%
  • The calculation is as follows:

We know that

National saving = Public saving + Private saving

Here

Private saving =  household + Business savings

= 200 + 300

= 500

And,  

Public saving = Tax revenue - expenditures

= 220 - (80 + 100)

= 40

Now  

National saving is

= 500 + 40

= 540

And,  

National saving rate

 = National saving ÷ GDP

= (540 × 100) ÷ 1800

= 30%

In this way, it should be calculated.

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