In a closed economy, private saving, , is equal toA) I - (G - T).B) I + (G - T).C) I + (G + T).D) I - (G + T).E) I + (G - T) + C.
Question
In a closed economy, private saving, is equal to
A) I - (G - T)
B) I + (G - T)
C) I + (G + T)
D) I - (G + T)
E) I + (G - T) + C.
Solution
In a closed economy, the equation for private saving is S = Y - T - C, where:
- S is private saving
- Y is national income
- T is taxes
- C is consumption
Also, in a closed economy, the national income Y is equal to the sum of consumption (C), investment (I), and government purchases (G). So, we can write Y = C + I + G.
Substituting the second equation into the first, we get S = (C + I + G) - T - C.
Simplifying this, we get S = I + (G - T).
So, the correct answer is B) I + (G - T).
Similar Questions
Tropicana is a closed economy, described by the following equations:Solve for the following values.a. Private saving
In a closed economy with no government, the level of national saving is equal to the level of investment.Group of answer choicesTrueFalse
If income in a closed, private economy is $50 and consumption is $35, what is the amount of savings?Multiple choice question.$15$85$35$50
If entire additional income is saved then MPC is:(a). Zero (b). one(C). Infinity (d). Between 0 and 1
Consider the following economy:(1) C = 1000 + 0.3 (Y - T)(2) I = 700(3) G = 500(4) T = 400Autonomous spending is:
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.