Determining the private saving

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Suppose that consumption is $14 trillion, investment is $4 trillion, government spending is $4 trillion, taxes are $4 trillion, and capital inflow and capital outflow are $0.5 billion.

1) Suppose that there is no government and the economy is a closed economy. How much is private saving? Why?

2) Suppose that there is a government and the economy is a closed economy. How much is a public saving? Is there a budget surplus, budget deficit, or a balanced budget? How much is a national saving?

3) Suppose that there is a government and the economy is an open economy. How much is a net capital flow? Is there a net capital inflow or a net capital outflow or no net capital flow? Is investment greater than national saving or smaller than national saving or equal to national saving?

Reference no: EM132512379

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