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Calculating government purchases

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Calculate the values for government purchases (G), private domestic saving (S), and private domestic investment (I) from the following information (all variables are in billions of dollars).

National income Y = 5,200
Budget deficit BuD = 150
Disposable income YD = 4,400
Trade deficit TD = 110
Consumption C = 4,100

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Solution Summary

The expert calculates government purchases, private domestic savings and private domestic investments.

Solution Preview

There are four formulae that you will need to use.

Y = C + G + I + X - M
Y = C + S + T
Budget Deficit = G - T
Disposable Income (DY) = Y - T
Private Savings = DY - ...

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