Go to the Web site of the Federal Reserve Bank of St. Louis (FRED) (research.stlouisfed.org/fred2/).
a. Find the most recent value and the value from the same quarter four years earlier for Gross Government Saving (GGSAVE).
b. Total saving in the economy is composed of private saving and government saving. What does government saving represent?
c. Using the values found in part (a), explain whether the government budget in each of the two periods is balanced, in a surplus, or in a deficit. From the first period to the most recent period, has government saving increased, decreased, or remained constant?
d. Draw a graph showing the loan able funds market in equilibrium. Use the graph to show the effect of the change in government saving that you calculated in part (c) on the loan able funds market. (Assume that the level of private saving is unchanged.) Explain what will happen to the level of investment in the economy.