Public saving, also known as the budget surplus, is the term (T ? G ? TR), which is government revenue through taxes, minus government expenditures on goods and services, minus transfers. Thus we have that private plus public saving equals investment.
The correct option is (a) . The budget deficit is defined as T- (G+TR), and this is negative. ‘T’ represents tax revenue. ‘G’ represents government… See full answer below.
Public saving, otherwise called the spending excess, is the term (T ? G ? TR), which is government income…
S government=T-G-TR T= tax revenues G=government spending TR government transfers, S(public) = T – G – TR We can find the total amount of savings (S) occurring in the economy by adding public savings to private savings. S(public) + S(private) = S, 14. If T – (G + TR) is positive, there is a government budget surplus. If T – (G + TR) is negative, there is a government budget deficit. 15. The existence of budget deficits must mean that the government is conducting an expansionary fiscal policy. 16. The equation for aggregate demand with government in an open economy is: AD = C + I + G + NX
