Question

The country of Yokovia does not trade with any other country. Its GDP is $20 billion. Its government collects $2 billion in taxes. Consumption equals $15 billion and investment equals $2 billion. What is public saving in Yokovia, and what is the value of the goods and services purchased by the government of Yokovia?

Answer 1

Answer:

(a) $3 billion

(b) -$1 billion

Explanation:

All are in terms off billion

Y = 20

T = 2  

C = 15

I = 2

we know that Y = C + I + G  

20 = 15 + 2 + G  

20 - 17 = G  

G = 3  

So the value of the goods and services purchased by the government of Yokovia = 3 billion

Public saving = T - G  

                       = 2 - 3

                       = - 1 billion