Suppose private savings is $2 trillion and public savings is $1.1 trillion. Under the assumption that...
Suppose private savings is $2 trillion and public savings is $1.1 trillion. Under the assumption that this is a closed economy, calculate:
1) National savings
2) Investment
Homework Answers
For a closed economy,
Public savings = government savings = government revenue - government spending. Private savings is disposable income minus consumption i.e. the amount that is available for investment.
1)
National savings = public savings + private savings = 1.1 + 2 = $3.1 trillion
2)
Private savings is disposable income minus consumption i.e. the amount that is available for investment.
Investment = Private savings = $2 trillion.
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Suppose private savings is $2 trillion and public savings is
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Question 4
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