How to evaluate total savings, Macroeconomics

Assignment Help:

Q. How to evaluate total savings?

Total savings

Total savings S(r) depends positively on the real interest rate

Remember that total savings is stated as S = SH + SG + SR, sum of net savings from the household, government and rest of the world. As with SH, S may be the observed amount of savings or total supply of savings. In the classical model, SR and SG are exogenous variables. SG = NT - G and SR = Im - X depend only on exogenous variables and are thus themselves exogenous. 

Only part of savings that is endogenous is household savings. Because household savings depend positively on real interest rate, total savings will depend positively on real interest rate. In the classical model we use S(r) to signify total savings and we have 

S(r) = SH(r) + SG + SR.

Note that SH, SG, and/or SR may very well be negative. For instance when SG is negative, G > NT and government is a net borrower.


Related Discussions:- How to evaluate total savings

Described as a market in equilibrium, Camping at Wilson's Promontory, a nat...

Camping at Wilson's Promontory, a national park in Victoria, isn't free, but for many years now not everyone who wants to camp at Wilson's Promontory during the Christmas holidays

Describe in short about money in economics, Describe in short about Money ...

Describe in short about Money "Money" in economics is actually not as simple to understand as you may think and many use the term money in a way inconsistent with how it's defi

Define gdp, A farmer grows a bushel of wheat & sells it to a miller for Rs....

A farmer grows a bushel of wheat & sells it to a miller for Rs. 1.00. The miller turns the wheat into flour & then sells the flour to a baker for RS. 3.00. The baker uses the f

Wi cost of debt and wacc, hi I just found an interesting problem on your pa...

hi I just found an interesting problem on your page,(wood investments ... Mutch PLC) I would like to see the answer Could you please give me a quote for the answer?

Nation of tigerland imported goods, Last year, the nation of Tigerland impo...

Last year, the nation of Tigerland imported goods totaling $500 million and exported products totaling $386 million. Tigerland experienced a(n).

Annualized cost of the investment, After a competitive bidding process, Fir...

After a competitive bidding process, Firm G wins a contract to collect and dispose of Firm H's hazardous waste for $1,000 per year. Firm G's labor costs are $200 per year, and beca

Survey of household spending, In 2007, based upon the Survey of Household S...

In 2007, based upon the Survey of Household Spending of 2005, Statistics Canada announced the following weights for the major spending categories tracked by the CPI.

Break-even level of income, Assume that when an economy has a GDP of $500, ...

Assume that when an economy has a GDP of $500, Consumption is $550. The MPC is .75. Investment is 25. Begin the problem by setting up an Income/Consumption Schedule like the one on

Central banking, what are the qualitative methods of controling credit

what are the qualitative methods of controling credit

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd