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In the nation of Ruva, GDP is $15 trillion, consumption is $10 trillion, and government spending is $2.5 trillion. Taxes are $1 trillion, and the net capital inflow is $0.5 trillion.

Private savings in Ruva equal $_____ trillion.

Answer :

Final answer:

Private savings in the nation of Ruva equal $4.5 trillion. This was calculated by first determining government savings and then using the national savings formula, considering the given values for GDP, consumption, government spending, taxes, and net capital inflow.

Explanation:

To calculate private savings in the nation of Ruva, we can use the following formula for National Savings (S):

S = Private Savings + Government Savings

Government Savings is the difference between Taxes (T) and Government Spending (G), so:

Government Savings = T - G

Given that Taxes are $1 trillion and Government Spending is $2.5 trillion, Government Savings will be:

Government Savings = $1 trillion - $2.5 trillion = -$1.5 trillion

Since the National Savings must also equal Investment (I) plus Net Capital Inflow (NCF), we have:

S = I + NCF

The Gross Domestic Product (GDP) equation is as follows:

GDP = Consumption (C) + Investment (I) + Government Spending (G) + Net Exports (NX)

We can rearrange this to solve for Investment:

I = GDP - C - G - NX

Since the question does not give Net Exports (NX) directly, we can ignore this part as the Net Capital Inflow is given instead, which is part of the calculation of National Savings.

Now, let's plug in the numbers to find Investment (I):

I = $15 trillion - $10 trillion - $2.5 trillion

I = $2.5 trillion

Now we can find National Savings:

S = I + NCF

S = $2.5 trillion + $0.5 trillion

S = $3 trillion

Since National Savings is the sum of Private Savings and Government Savings:

$3 trillion = Private Savings - $1.5 trillion

So, Private Savings = $3 trillion + $1.5 trillion = $4.5 trillion

Therefore, private savings in Ruva equal $4.5 trillion.

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Rewritten by : Jeany

Answer:

Private Savings = $4 Trillion

Explanation:

Given that

GDP = Y = 15 Trillion

Taxes = T = 1 trillion

Consumption = C = 10 trillion

Recall that

Private Savings = Y - T - C

Therefore,

Private savings = 15 - 1 - 10

= $ 4 Trillion

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