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Chris M., M.S.W. Social Work
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# the economy last year y 10000 c 6000 t 1500 g 1700 the

the economy last year:
y=10000
c=6000
t=1500
g=1700

the government uses the following equation for the investment function:
I=3300-100r

r=real interst rate
how to calculate and explain private savings?

Hello,

National savings (S) = private savings + public savings

Private savings is calculated by subtracting consumption or C from disposable income, which is represented as (Y-T), with Y being the GDP (Gross Domestic Product) and T being tax payments. The expression (T-G) refers to revenue received by the government through taxes less government expenses. This is defined as public savings.

S = (Y-T-C) + (T-G)

Private savings = Y-T-C

given that Y=10,000, T=1,500 and C=6,000

10,000 - 1,500 - 6,000 = 2,500

Private savings = 2,500

Hope this helps!

Edited by Chris M. on 8/22/2010 at 3:12 AM EST
Customer: replied 6 years ago.

s=(y10000-t1500-c6000)+t1500-g1700=

s=2500+(-1700)=2300

if T is less than G tpublic svgs is negative, therefore represents a budget deficit

is this correct?

what about I=3300-100r; r=real interest. do I have to account for this in my calculation?