Imagine Brotherland, a thriving economy; assume this economy has government but is closed. The income flow in this economy is, 600 billion (bn) dollar; the government collects a lumpsum tax of 20 billion dollar and transfers a fixed 10 billion to the households. The government borrows a fixed amouunt of 70 billion dollar from the banking system in the economy. If the household sector saves a fixed 20% of their disposable income (income left net of tax and transfer), then what is the size of firm investment in this economy? (write down only the number in your answer.)

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To find the size of firm investment in Brotherlands economy we need to calculate the disposable inco... View the full answer