Question

Suppose that in a closed economy GDP is equal to $11,000, net taxes are equal to $2,500, consumption equals $7,500 and government purchases equal $2,000. What are private saving, public saving, and national saving?

		$1,500, $1,000, and $500, respectively
		$1,000, $500, and $1,500, respectively
		$500, $1,500, and $1,000, respectively
		None of the above is correct.

Answer 1

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i Private Saving = Income - Taxes - Consumption u = H2000 - 2500 - 7500 z | ODD - 10,000 PD) Public Saving = Governambut Revenue - Goverkomen - Spendings - $ 2500 – $2000 = $ 500 [since, economy is closed so ta es conly source of revenue National Saving = Pauvate saving & Public saving Le = $1000 + $500 ( = $1500.- o Thus, option (b) is correct.