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.

ECON 2002.01 AU2025 (21333) Final Exam- Requires Respondus LockDown Browser

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

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