Calculate the sum of saving and taxes below based on the following equations that make up aggregate expenditure.

Consumption: C = 2,700 + 0.9Y
Planned investment: I = 3,000
Government purchases: G = 1,100
Net exports: NX = -300
Equilibrium condition: Y = C + I + G + NX

Question

Calculate the sum of saving and taxes below based on the following equations that make up aggregate expenditure.

Consumption: C = 2,700 + 0.9Y
Planned investment: I = 3,000
Government purchases: G = 1,100
Net exports: NX = -300
Equilibrium condition: Y = C + I + G + NX

BlackTom AI · Accepted Answer

We start by parsing the given equations and the equilibrium condition to set up Y.
C is given as 2700 + 0.9Y, I = 3000, G = 1100, NX = -300, and Y = C + I + G + NX.
Substitute C into the equilibrium: Y = (2700 + 0.9Y) + 3000 + 1100 + (-300).
Combine the constant terms: 2700 + 3000 + 1100 - 300 = 6500. So the equation becomes Y = 6500 + 0.9Y.
Solve for Y by isolating Y: Y - 0.9Y = 0.1Y = 6500, hence Y = 6500 / 0.1 = 65,000.
Next, consider the quantity asked: the sum of saving and taxes, S + T. In macroeconomics, the identity S = I + NX + (G - T) leads to S + T = I + NX + G.
Plug in the given values: I = 3000, NX = -300, G = 1100. Then S + T = 3000 + (-300) + 1100 = 3800.
Now evaluate the options individually:
- "$6,500": This figure corresponds to Y itself or a miscalculation of aggregate components, not S + T. It ignores the role of taxes and the government balance term.
- "$4,000": Closer but not matching the exact S + T identity result; this might arise from rounding or miscounting components, but it’s inaccurate for the stated identity.
- "$3,800": This matches I + NX + G precisely, which is the standard expression for S + T in this framework. It reflects saving plus taxes combined, given the other exogenous macro components.
- "$4,400": This value would imply a different combination of terms (perhaps miscounting NX or G) and does not align with the proper identity for S + T.
In sum, option 3 aligns with the macroeconomic identity S + T = I + NX + G using the provided numbers, while the others misrepresent the relationship or miscompute the components.

Calculate the sum of saving and taxes below based on the following equations that make up aggregate expenditure. Consumption: C = 2,700 + 0.9Y Planned investment: I = 3,000 Government purchases: G = 1,100 Net exports: NX = -300 Equilibrium condition: Y = C + I + G + NXSingle choice

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