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    Sam SETO
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    The document discusses concepts related to national income accounting including: 1) In a closed economy, investment is equal to savings. It provides an example where GDP is $10 trillion, consumption is $6.5 trillion, government spending is $2 trillion with a $300 billion budget deficit to calculate public, private, national savings and investment. 2) More investment leads to more capital accumulation and a better living standard by increasing production. Increases in the workforce, investment, and technology also raise living standards over time. 3) Exercises are provided to apply the concepts.

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    The document discusses concepts related to national income accounting including: 1) In a closed economy, investment is equal to savings. It provides an example where GDP is $10 trillion, consumption is $6.5 trillion, government spending is $2 trillion with a $300 billion budget deficit to calculate public, private, national savings and investment. 2) More investment leads to more capital accumulation and a better living standard by increasing production. Increases in the workforce, investment, and technology also raise living standards over time. 3) Exercises are provided to apply the concepts.

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    © All Rights Reserved
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    9 views2 pages

    Untitled

    Uploaded by

    Sam SETO
    The document discusses concepts related to national income accounting including: 1) In a closed economy, investment is equal to savings. It provides an example where GDP is $10 trillion, consumption is $6.5 trillion, government spending is $2 trillion with a $300 billion budget deficit to calculate public, private, national savings and investment. 2) More investment leads to more capital accumulation and a better living standard by increasing production. Increases in the workforce, investment, and technology also raise living standards over time. 3) Exercises are provided to apply the concepts.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    Page 6:

    A) Yes, it will make the asset side become 8500+5000=13500


    B) People may save less than before as their stock is worth more
    right now, meaning that the wealth effect may happen.

    1. it will increase 2000$ net worth


    2. nothing has changed.
    3. Net worth increases
    4. Net worth decreases as assets decrease.

    In colsed economy, investment may be the same as saving


    I = Y – C – G=S

    § Suppose GDP equals $10 trillion,


    consumption equals $6.5 trillion,
    the government spends $2 trillion
    and has a budget deficit of $300 billion.
    § Find public saving, taxes, private saving, national saving, and
    investment.

    Public saving =T-G = -0.3


    T-2 = -0.3=1.7 =T
    Private= 10-6.5-1.7= 1.8
    National saing = (-0.3)+1.8= 1.5
    Investment = 1.5

    Page 37
    More investment = more capital; accumulation, better living
    standard
    Page 38.
    D ^, LF^, I^, living standard ^
    Exercises:

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