Answer to Question #188668 in Macroeconomics for Vanu@2

Question

What are the savings and investment,when the GDP is $1000, consumption is $600, taxes are $100, and the government purchases is $200

Answer 1

The GDP(by expenditre approach) is calculated as;

GDP = Consumption + Government purchases + Savings and investment + Net exports

In the question, GDP = $1,000 , Consumption = $600 and governmnet purchases = $200.

So, to get Savings and investment ;

GDP = Consumption + Govermnet pruchases + Savings and investment

$1,000 = $600 + $200 + savings and investment

$1,000 = $800 + savings and investment

Savings and investment = $1,000 $-$ $800 = $200.