Suppose that in a closed economy, GDP is $15 trillion, Consumption is $6 trillion,Government Purchases are $5 trillion, and there is a $500 billion budget deficit.6. What are taxes?7. What is public saving?8. What is private saving?9. What is national saving?10. What is investment?If then taxes are raised by $500 billion dollars, and the public pays for those taxesentirely by reducing their consumption (no change to their savings), after this taxincrease,11. What is consumption?12. What are taxes?13. What is public saving?14. What is private saving?15. What is national saving?16. What is investment?

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Suppose that in a closed economy, GDP is $15 trillion, Consumption is $6 trillion, Government Purchases are $5 trillion, and there is a $500 billion budget deficit. 6. What are taxes? 7. What is public saving? 8. What is private saving?

Suppose that in a closed economy, GDP is $15 trillion, Consumption is $6 trillion, Government Purchases are $5 trillion, and there is a $500 billion budget deficit. 6. What are taxes? 7. What is public saving? 8. What is private saving?

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Savings,investment And The Financial System

Section: Chapter Questions

Problem 4PA

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Concept explainers

Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.

Question

Suppose that in a closed economy, GDP is $15 trillion, Consumption is $6 trillion,
Government Purchases are $5 trillion, and there is a $500 billion budget deficit.
6. What are taxes?
7. What is public saving?
8. What is private saving?
9. What is national saving?
10. What is investment?
If then taxes are raised by $500 billion dollars, and the public pays for those taxes
entirely by reducing their consumption (no change to their savings), after this tax
increase,
11. What is consumption?
12. What are taxes?
13. What is public saving?
14. What is private saving?
15. What is national saving?
16. What is investment?

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