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If government purchases equal $100 million, consumption is $200 million, net exports are $0, and investment is $50 million, what are the national savings?$ million

Question

If government purchases equal 100million,consumptionis100 million, consumption is 200 million, net exports are 0,andinvestmentis0, and investment is 50 million, what are the national savings?$ million

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Solution

To calculate the national savings, we first need to calculate the Gross Domestic Product (GDP). The GDP is the sum of government purchases, consumption, net exports, and investment.

Step 1: Calculate GDP GDP = Government Purchases + Consumption + Net Exports + Investment GDP = 100million+100 million + 200 million + 0+0 + 50 million = $350 million

National savings is the part of GDP that is not consumed or spent by government. It is calculated as GDP minus consumption and government purchases.

Step 2: Calculate National Savings National Savings = GDP - Consumption - Government Purchases National Savings = 350million350 million - 200 million - 100million=100 million = 50 million

So, the national savings are $50 million.

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