Suppose GDP equals $9 trillion, consumption share

| November 24, 2016

Please help with the following question and show me the calculations. Thanks.

Suppose GDP equals $9 trillion, consumption share is 0.7 and the government expenditure share

is 0.2. Suppose this economy has a budget surplus of $800 billion. (15 points)

a. Find public saving, taxes, private saving, national saving, and investment.

b. If the government increased the tax income by 15%, find public saving, taxes, private saving,

national saving, and investment based on the assumption that consumers save all extra

income

c. Redo part b when consumers save exactly half of the extra income.

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