Consider an economy in which GDP is $7.8 trillion, public saving is

-$0.2 trillion (yes, it is a negative number), taxes are $0.8 trillion, private saving is $3.0 trillion, export is $0.4 trillion, and import is $0.5 trillion.Calculate consumption, government purchases, national saving, and investment.

Answer:

GDP=$7.8 trillion, S_pu= -$0.2 trillion, T=$ 0.8 trillion, S_pr=$ 3.0 trillion, Export=$ 0.4 trillion, Import=$ 0.5 trillion.

GDP = C + I +G +X =C +I +G + (Export- Import)

Government purchases= Taxes - Public Saving

National saving= S_pr + S_pu +S_f

Investment = national saving

National saving is the sum of private saving and public saving, so Investment= Private Saving + Public Saving=$ 3.0 trillion + (-$ 0.2 trillion) =$ 2.8 trillion

Investment must equal national saving, so Investment = National saving=$ 2.8 trillion

Government expenditure is difference between taxes and public saving, S_pu=T - G, so G=T-S_pu =$ 0.8 trillion - (- $ 0.2 trillion) =$ 1.0 trillion

Finally, GDP is the sum of consumption, investment, government expenditure, and net export.

Net export= Export - Import=$ 0.4 trillion- $ 0.5 trillion= -$ 0.1 trillion

That is, $7.8 trillion = consumption +$ 2.8 trillion+ $1.0 trillion +(- $0.1 trillion).So, consumption is consumption is $ 4.1 trillion

According to Professor Park's lecture, which macro variable represents the buyer side of the financial system?

Answer:Lenders