You are given the following information about the open economy of Macroland for 2014: - GDP $100 billion - Consumption $70 billion - Tax revenues $15 billion - Transfer payments $8 billion - Government spending $20 billion - Exports $10 billion - Imports $12 billion a. What is the level of investment spending in Macroland in 2014? b. What is the level of capital inflow for Macroland in 2014? Is Macroland borrowing from foreigners or lending to foreigners? Explain your answer. c. What is private savings equal to in Macroland in 2014? d. What is the government budget balance equal to in Macroland in 2014? e. Does national savings + capital inflow equal investment spending for this economy in 2014? Explain your answer. f. Is the government of Macroland saving or borrowing funds in 2014? Explain your answer.

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12-07-2022
Business

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You are given the following information about the open economy of Macroland for 2014: - GDP $100 billion - Consumption $70 billion - Tax revenues $15 billion - Transfer payments $8 billion - Government spending $20 billion - Exports $10 billion - Imports $12 billion a. What is the level of investment spending in Macroland in 2014? b. What is the level of capital inflow for Macroland in 2014? Is Macroland borrowing from foreigners or lending to foreigners? Explain your answer. c. What is private savings equal to in Macroland in 2014? d. What is the government budget balance equal to in Macroland in 2014? e. Does national savings + capital inflow equal investment spending for this economy in 2014? Explain your answer. f. Is the government of Macroland saving or borrowing funds in 2014? Explain your answer.

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Tundexi Tundexi · Answer 1 · 2022-07-13T20:24:21+02:00

The investment spending equals $12 billion, capital inflow equals -$2 billion, private savings equals $15 billion, budget balance equals -$5 billion.

What is the level of investment spending?

National income formula is "Y" = C + I + G + X - M

100 = 70 + I + 20 + 10 - 12

100 = I + 88

I = $12

Hence, the Investment spending equals $12 billion

What is the level of capital inflow?

Y = C + I + G + XM

XM = Y - C- I - G

XM = 100 - 70 - 12 - 20

XM = -$2 billion

What is private savings?

S = Y - T - C

S = 100 - 15 - 70

S = $15

What is the government budget balance?

Balance = T - G

Balance = 15 - 20

Balance = -$5

Is the government saving or borrowing funds?

Because the budget balance is in deficit, then, the government is borrowing funds to finance its budget.