Interpreting NationalIncome Measures

Question 1

Y =

Answer 1

C + I + G + X - IM

Question 2

Private Saving (Sa) =

Answer 2

Income (Ya) - Income taxes (Ta) - Consumption expenditures (Ca)

Question 3

Substituting Sa for Ya into the saving equation gives

Answer 3

Sa = Ca + Ia + Ga + Xa - IMa - Ta - Ca
Sa = Ia + Ga + Xa - IMa - Ta
(Sa - Ia) = (Ga - Ta) + (Xa - IMa)

Question 4

(Sa - Ia) = (Ga - Ta) + (Xa - IMa) represents

Answer 4

non-bank private sector surplus = public sector deficit + overseas sector deficit

Question 5

Sector balances must always

Answer 5

Sum to zero due to the fact they derived from a closed system

Question 6

Rearranged sector balances to show 0 sum …

Answer 6

(Ia - Sa) + (Ga - Ta) + (X-IMa) = 0