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Answer :
The national saving, which is the sum of private saving and public saving, is calculated by subtracting consumption from disposable income for private saving and subtracting government spending from net taxes for public saving. Using the given values, the national saving is determined to be $0.7 trillion.
To find the national saving, we need to add private saving and public saving. Private saving is the difference between disposable income and consumption, while public saving is the difference between net taxes and government spending.
Private saving = Disposable income - Consumption
Public saving = Net taxes - Government spending
Given:
GDP = $8 trillion
Net taxes = $1.5 trillion
Private saving = $0.5 trillion
Public saving = $0.2 trillion
To find national saving, we need to calculate government spending first.
Government spending = Net taxes - Public saving
Government spending = $1.5 trillion - $0.2 trillion
Government spending = $1.3 trillion
Now, we can calculate disposable income using the formula:
GDP = Disposable income + Consumption + Government spending
$8 trillion = Disposable income + Consumption + $1.3 trillion
Rearranging the equation:
Disposable income = $8 trillion - Consumption - $1.3 trillion
Since private saving is equal to disposable income minus consumption:
$0.5 trillion = ($8 trillion - Consumption - $1.3 trillion) - Consumption
Simplifying the equation:
$0.5 trillion = $8 trillion - 2 * Consumption - $1.3 trillion
$0.5 trillion = $6.7 trillion - 2 * Consumption
Rearranging the equation:
2 * Consumption = $6.7 trillion - $0.5 trillion
2 * Consumption = $6.2 trillion
Consumption = $3.1 trillion
Now, we can calculate national saving by adding private saving and public saving:
National saving = Private saving + Public saving
National saving = $0.5 trillion + $0.2 trillion
National saving = $0.7 trillion
Therefore, the national saving is $0.7 trillion.
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