Answer to Question #277152 in Macroeconomics for Munachi Beluchi

Question

Suppose a country has total GDP(Y)=\$12 trillionconsumption (C)=\$8 trillion government spending (G)=\$2 trillion Investment $3 trillionand taxes . a. What is the level of net exports or balance of tra $trillion bWhat is the level of public savings? What is the level of private savings? $ trillion What is the level of net capital outflow ?

Answer 1

a) Net exports:

Net exports can be calculated as:

GDP= consumption + Investment + Government expenditure + NEt export

12 = 8+3+2+NEt export

Net export = -1

Hence, the value of net export is -$1 trillion

(b) Public savings

Public savings can be calculated as follows:

Public savings = Tax - Government expenditure

=3 - 2

=1

Hence, the value of public saving is $1 trillion

(c) Private savings:

Private savings can be calculated as follows:

Private saving= (GDP - Tax) - Consumption

=(12 - 3) - 8

= 1

Hence, the value of public savings is $1 trillion

(d) Net capital flow:

Net capital flow can be calculated as follows:

National capital flow= Saving - Investment

=(GPD - Consumption - government expenditure) - Investment

= (12- 8 - 2) - 3

= -1

Since the capital flow is negative, there is net capital outflow and is $1 trillion