Question
Please help with these Macro questions Assume the US is operating in a closed economy and GDP is $15 trillion, consumption is 7.5 trillion, government
Please help with these Macro questions
Assume the US is operating in a closed economy and GDP is $15 trillion, consumption is 7.5 trillion, government spending is 5 trillion, and there is a balanced budget. (15 points total) a. Write the equation for public saving. What is public saving in this economy?
Write the equation for public saving. What is public saving in this economy? (2 points)
b. What are net taxes? (1 point)
c. Write the equation for private saving. What is private saving in this economy? (2 points)
d. What is national savings? National investment? (2 points)
e. Now, taxes increase by 1.5 trillion and household consumption decreases by 2 trillion. Find public, private, and national savings (3 points).
f. Assume the market for loanable funds was in equilibrium before the tax increase and consumption decrease mentioned in part e). Which curve (supply or demand) in the loanable funds market will be impacted by the events described in part e)? Analyze the new market equilibrium. (3 points)
g. How might the changes in national saving and investment brought on in part e) impact productivity in the long run? (2 points)
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