Author Question: Consider the following data for a closed economy: a. Y = 12 trillion b. C = 8 trillion c. I = 3 ... (Read 111 times)

geoffrey

  • Hero Member
  • *****
  • Posts: 880
Consider the following data for a closed economy:
  a. Y = 12 trillion
  b. C = 8 trillion
  c. I = 3 trillion
  d. TR = 2 trillion
  e.
 
  T = 3 trillion
 
  Use the data provided to calculate the level of private saving and the level of public saving and demonstrate their relationship to investment.

Question 2

An optimal two-part tariff pricing schedule maximizes consumer surplus.
 
  Indicate whether the statement is true or false


mcni194

  • Sr. Member
  • ****
  • Posts: 311
Answer to Question 1

Private saving is equal to Y + TR - C - T, and public saving is equal to T - G - TR. Plugging in the appropriate numbers for private saving, private saving = Y + TR - C - T = 12t + 2t - 8t - 3t = 3 trillion. Using the identity for output in a closed economy, G = Y - C - I = 12t - 8t - 3t = 1t, so public saving = 3t - 1t - 2t = 0. Adding together private saving of 3 trillion and public saving of 0 yields saving of 3 trillion, which is exactly equal to investment of 3 trillion.

Answer to Question 2

FALSE



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Anesthesia awareness is a potentially disturbing adverse effect wherein patients who have been paralyzed with muscle relaxants may awaken. They may be aware of their surroundings but unable to communicate or move. Neurologic monitoring equipment that helps to more closely check the patient's anesthesia stages is now available to avoid the occurrence of anesthesia awareness.

Did you know?

In the United States, an estimated 50 million unnecessary antibiotics are prescribed for viral respiratory infections.

Did you know?

Hyperthyroidism leads to an increased rate of metabolism and affects about 1% of women but only 0.1% of men. For most people, this increased metabolic rate causes the thyroid gland to become enlarged (known as a goiter).

Did you know?

The average older adult in the United States takes five prescription drugs per day. Half of these drugs contain a sedative. Alcohol should therefore be avoided by most senior citizens because of the dangerous interactions between alcohol and sedatives.

Did you know?

The B-complex vitamins and vitamin C are not stored in the body and must be replaced each day.

For a complete list of videos, visit our video library