Question 1

For an imaginary closed economy,T = $5,000;S = $11,000;C = $50,000;and the government is running a budget deficit of $1,000.Then

Accepted Answer

Private saving = S - T = $11,000 - $5,000 = $6,000 
National saving = S + (T - G) = $11,000 + ($5,000 - $1,000) = $15,000 
Investment = National saving = $15,000 
GDP = C + I + G = $50,000 + $15,000 + $1,000 = $66,000 
Therefore, the correct answer is C) private saving = $12,000 and GDP = $67,000.

Question 2

Scenario 26-1.Assume the following information for an imaginary,closed economy.
GDP = $110,000;consumption = $70,000;private saving = $8,000;national
saving = $12,000.
-Refer to Scenario 26-1.This economy's government is running a

Accepted Answer

National saving is the sum of private saving and public saving. Given national saving is $12,000 and private saving is $8,000, public saving (government saving) is $4,000. Since public saving is positive, the government is running a budget surplus of $4,000.

Question 3

For a closed economy,GDP is $11 trillion,consumption is $7 trillion,taxes are $3 trillion and the government runs a surplus of $1 trillion.What are private saving and national saving?

Accepted Answer

The answer of For a closed economy,GDP is $11 trillion,consumption...

Question 4

The country of Yokovia does not trade with any other country.Its GDP is $30 billion.Its government purchases $5 billion worth of goods and services each year,collects $7 billion in taxes,and provides $3 billion in transfer payments to households.Private saving in Yokovia amounts to $5 billion.What are consumption and investment in Yokovia?

Accepted Answer

Consumption is calculated as GDP minus government spending and investment. Investment is calculated as private saving plus government saving.

Question 5

The country of Meditor uses the merit as its currency.Recent national income statistics showed that it had GDP of $700 million merits,no government transfer payments,taxes of $210 million merits,a budget surplus of $60 billion merits,and investment of $100 billion merits.What were its consumption and government expenditures on goods and services?

Accepted Answer

To find out the consumption, we can use the equation:

GDP = C + I + G

where:

GDP = 700 million merits (given) 
I = 100 billion merits (given) 
G = government expenditures on goods and services 
C = consumption

Substituting the given values:

700 million merits = C + 100 billion merits + G

We know that taxes are equal to $210 million, so the government's revenue is $210 million. Also, we know that the budget surplus is $60 billion, which means that the government spent $100 billion ($60 billion surplus + $40 billion expenditures) on goods and services.

Substituting these values:

700 million merits = C + 100 billion merits + 100 billion merits

Simplifying:

700 million merits = C + 200 billion merits

C = 700 million merits - 200 billion merits

C = 450 million merits

Therefore, the consumption is 450 million merits and the government expenditures on goods and services is $150 million merits (calculated as: $100 billion - $60 billion surplus - $210 million taxes = $39,790 million = $150 million merits).

The correct answer is A) 450 million merits and $150 million merits.

Question 6

Consider three different closed economies with the following national income statistics.Country A has taxes of $40 billion,transfers of $20 billion,and government expenditures on goods and services of $30 billion.County B has private savings of $60 billion,and investment expenditures of $50 billion.Country C has GDP of $300 billion,investment of $70,consumption of $180 billion,taxes of $60 billion and transfers of $20 billion.From this information we know that there is a $10 billion government budget deficit for

Accepted Answer

The answer of Consider three different closed economies with the...

Question 7

If in a closed economy Y = $11 trillion,which of the following combinations would be consistent with national saving of $2.5 trillion?

Accepted Answer

The answer of If in a closed economy Y =...

Question 8

For a closed economy,GDP is $11 trillion,consumption is $7 trillion,taxes are $2 trillion and the government runs a deficit of $1 trillion.What are private saving and national saving?

Accepted Answer

The answer of For a closed economy,GDP is $11 trillion,consumption...

Question 9

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?

Accepted Answer

Public saving is equal to government revenue minus government spending, which is $4 billion - $3 billion = $1 billion. The value of the goods and services purchased by the government of Hykenia is equal to government spending, which is $3 billion.

Question 10

The country of Cedarland does not trade with any other country.Its GDP is $20 billion.Its government purchases $3 billion worth of goods and services each year,collects $6 billion in taxes,and provides $2 billion in transfer payments to households.Private saving in Cedarland is $4 billion.What is investment in Cedarland?

Accepted Answer

In a closed economy, GDP (Y) is the sum of consumption (C), investment (I), and government spending (G). Given Y = $20 billion, G = $3 billion, and taxes (T) = $6 billion with transfer payments (TR) = $2 billion, disposable income is Y - T + TR = $16 billion. Private saving is $4 billion, so consumption is $12 billion. Therefore, investment (I) = Y - C - G = $20 billion - $12 billion - $3 billion = $5 billion.

Question 11

Scenario 26-1.Assume the following information for an imaginary,closed economy.
GDP = $110,000;consumption = $70,000;private saving = $8,000;national
saving = $12,000.
-Refer to Scenario 26-1.For this economy,taxes amount to

Accepted Answer

The answer of Scenario 26-1.Assume the following information for an...

Question 12

You have some estimates of national accounts numbers for a closed economy for the coming year.Under one set of expectations,government purchases will be $30 billion,transfer payments will be $10 billion,and taxes will be $45 billion.Under another set of expectations,GDP will be $200 billion,taxes will be $50 billion,transfer payments will be $20 billion,consumption will be $120 million,and investment will be $40 billion.Based on these numbers in the first case there should be a

Accepted Answer

For the first case, we can calculate the budget balance as follows:

Budget Balance = Taxes - Government Purchases - Transfer Payments
Budget Balance = $45 billion - $30 billion - $10 billion
Budget Balance = $5 billion surplus

For the second case, we can calculate the budget balance as follows:

GDP = Consumption + Investment + Government Purchases
$200 billion = $120 billion + $40 billion + Government Purchases
Government Purchases = $40 billion

Budget Balance = Taxes - Government Purchases - Transfer Payments
Budget Balance = $50 billion - $40 billion - $20 billion
Budget Balance = $10 billion deficit

Therefore, the answer is D. $5 billion surplus in the first case, and a $10 billion deficit in the second case.

Question 13

Suppose the economy is closed with national saving of $2 trillion,consumption of $7 trillion,and government purchases of $1 trillion.What is GDP?

Accepted Answer

In a closed economy, GDP (Y) is calculated as Y = C + I + G, where C is consumption, I is investment, and G is government purchases. National saving (S) is equal to investment (I) in a closed economy, so S = I. Given S = $2 trillion, C = $7 trillion, and G = $1 trillion, GDP = C + I + G = $7 trillion + $2 trillion + $1 trillion = $10 trillion.

Question 14

The country of Growpaw does not trade with any other country.Its GDP is $17 billion.Its government purchases $4 billion worth of goods and services each year,collects $6 billion in taxes,and provides $1 billion in transfer payments to households.Private saving in Growpaw is $4 billion.For Growpaw,

Accepted Answer

The GDP is $17 billion. Government spending is $4 billion, and net taxes (taxes minus transfers) are $5 billion. Private saving is $4 billion, so national saving (private saving plus government saving) is $5 billion. Therefore, investment is $5 billion. Consumption is GDP minus government spending minus investment, which is $17 billion - $4 billion - $5 billion = $8 billion.

Question 15

In the small closed economy of San Lucretia,the currency is the denar.Statistics for last year show that private saving was 60 billion denars,taxes were 70 billion denars,government purchases of goods and services were 80 billion denars,there were no transfer payments by the government,and GDP was 400 billion denars.What were consumption and investment in San Lucretia?

Accepted Answer

The answer of In the small closed economy of San...

Question 16

In examining the national income accounts of the closed economy of Nepotocracy you see that this year it had taxes of $100 billion,transfers of $40 billion,and government purchases of goods and services of $80 billion.You also notice that last year it had private saving of $50 billion and investment of $70 billion.In which year did Nepotocracy have a budget deficit of $20 billion?

Accepted Answer

The answer of In examining the national income accounts of...

Question 17

Suppose the economy is closed and consumption is 6,500,taxes are 1,500,and government purchases are 2,000.If national saving amounts to 1,000,then what is GDP?

Accepted Answer

GDP = Consumption + Investment + Government Purchases + (Exports - Imports)Since the economy is closed, Exports - Imports = 0.Therefore, GDP = Consumption + Investment + Government Purchases= 6,500 + 1,000 + 2,000= 9,500

Question 18

Scenario 26-1.Assume the following information for an imaginary,closed economy.
GDP = $110,000;consumption = $70,000;private saving = $8,000;national
saving = $12,000.
-Refer to Scenario 26-1.For this economy,investment amounts to

Accepted Answer

Investment is equal to national saving, which is given as $12,000 in this scenario. Therefore, the answer is C.

Question 19

Scenario 26-1.Assume the following information for an imaginary,closed economy.
GDP = $110,000;consumption = $70,000;private saving = $8,000;national
saving = $12,000.
-Refer to Scenario 26-1.For this economy,government purchases amount to

Accepted Answer

Government purchases can be calculated as follows: 
Government purchases = GDP - consumption - private saving - national saving 
Government purchases = $110,000 - $70,000 - $8,000 - $12,000 
Government purchases = $20,000 
Therefore, the best choice is C), which is the closest option to $20,000.

Question 20

In a closed economy,private saving is

Accepted Answer

Private saving is the amount of income that households have left after paying for their taxes and consumption. It does not include business savings or government savings. Private saving can be used for future consumption or investment. In a closed economy, where there is no foreign trade or investment, private saving is always equal to investment.

Quiz 26: Saving, investment, and the Financial System

For an imaginary closed economy,T = $5,000;S = $11,000;C = $50,000;and the government is running a budget deficit of $1,000.Then

Scenario 26-1.Assume the following information for an imaginary,closed economy. GDP = $110,000;consumption = $70,000;private saving = $8,000;national saving = $12,000. -Refer to Scenario 26-1.This economy's government is running a