4. Consider the following information for a closed economy. Y = $12 trillion, C = $8 trillion, G = $2 trillion, Spublic = $-0.5 trillion and T = $2 trillion. 1. What is private savings for this economy? 2. What is investment spending for this economy? 3. What are the transfer payments for this economy? 4. Is there a government budget deficit or surplus for this economy? PreviousNext

a. Private savings= $2.5 trillion

b. Investment = $2 trillion

c. Transfer payment = $0.5 trillion

d. The economy has a budget deficit of $0.5 trillion.

Explanation:

Y = $12 trillion

C = $8 trillion

G = $2 trillion

Spublic = $-0.5 trillion

T = $2 trillion

(a) Private Savings =Y + TR -C - T., where Y is GDP, TR is Transfer Payment, C is consumption expenditure and T are taxes. 

Private savings = 12 + 0.5 - 8 -2

Private savings = $2.5 trillion.

(b) Investment= Y - C - G

= 12 - 8 - 2

Investment= $2 trillion.

(c) Solve for Transfer payment(TR) by rearranging public saving: T-G-TR = S(public).

TR = T - G - S(public)

= 2 - 2 - (-.5)

= 0.5 trillion

The transfer payment is 0.5 trillion dollar.

(d) To know whether there's budget surplus or not, we find the budget balance = T - G - TR

= 2 - 2 - 0.5

= -0.5 trillion.

This shows that there's a budget deficit of 0.5 trillion dollar.

answer; work samples;

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.