The following data ($ millions) are for the island nation of Pacifica over a year.
Total output ................................................................... $10
Total income......................................................................$10
Consumption......................................................................$ 6
Government spending......................................................... $ 3
Total tax revenue......................................................... $ 2.5
Transfer payments......................................................... $ 0.5
a. Use this information to find Pacifica’s net taxes, disposable income, and savings.
b. Determine whether the government is running a budget surplus, budget deficit, or balanced budget.
c. Find planned investment by calculating how much is available in the loanable funds market after the government has borrowed what it might need.
d. Does total output equal total spending?
e. Show your answers on a diagram similar to the one in Figure 10 in the chapter.