1. National savings comprise the total public and private savings. In a closed economy, the equation for national savings in a closed economy is:
- Y = C (consumption) + I (investment) + G (government purchases)
In an open economy, the national savings adds the Net Exports (NX), which comprises the difference between exports and imports. Thus, the equation is:
- Y = C + I + G + NX (net exports)
a) Government savings is the deduction of spending, transfer payments and government debt interest from the taxes.
- Savings = Taxes – Spending – Transfer Payments – Interest
b) Private savings comprises the difference between the sum of the National Income, foreign net factor payments, transfer payments and interest against the debt, taxes and consumption.
- P = GDP + Net factor payments + Transfer payments + I – T – C
2. Inventories and Fixed capital comprise two government investment expenditures that sustain the worker’s productivity.
a) Taxes and subsidies comprise two ways of funding these projects.
3. The Gross Private Domestic Investment comprises the investment measure used to calculate the Gross Domestic Product (GDP) in the economic computation of countries. The productivity of the American worker depends on I. This is because the I (investment) augments the ability to produce in the future by sacrificing the existing consumption. Usually, investment facilitates the acquisition of capital commodities or tasks used by households in order to accomplish economic growth.
4. Apart from the NIPA, another statistical series that may undergo utilization comprises the Gross Domestic Product (GDP). The GDP is significant since it is able to determine the economic health of a country. Accordingly, countries utilize the GDP in order to plan strategies that will continue increasing their economic growth. For instance, countries either cut government spending or increase borrowing or taxation in order to facilitate economic activity and increase the national income.