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Suppose Consumption is 8000. Investment is 2000. Government purchase is 1000. Net export is 0. Government transfer and interest payment is 2000 and government tax
Suppose Consumption is 8000. Investment is 2000. Government purchase is 1000. Net export is 0. Government transfer and interest payment is 2000 and government tax collection is 2000. a. (5 pts) Calculate Net Taxes b. (5 pts) Calculate Private Savings c. (5 pts) Does the government has a budget surplus or budget deficit? d. (5 pts) Calculate national savings e. (5 pts) What happens to national savings if government tax increases by 30%? (increase, decrease or stay the same)
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