Based on the following information, calculate public saving, net foreign investment, and national income
Private saving = $83 billion
Exports = $125 billion
Imports = $130 billion
Consumption = $200 billion
Private investment = $56 billion
Government purchases = $38 billion
Based on the macroeconomic equation for national income, Y = C + I + G + NX = 200 + 56 + 38 + -5 = $289 billion. Since net exports are -$5 billion, net foreign investment must also be -$5 billion. According to the saving and investment equation, national saving = domestic investment plus net foreign investment. Based on the numbers provided, domestic investment plus net foreign investment = $56 billion + -$5 billion = $51 billion. This $51 billion comes from private and public saving. Since private saving is $83 billion, it must be the case that public saving is -$32 billion, so the government is running a budget deficit of $32 billion.
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