In a closed economy, the values for GDP, consumption spending, investment spending, transfer payments, and taxes are as follows: Y = $12 trillion C = $9 trillion I = $3 trillion TR = $2 trillion T = $3 trillion Using the information above, what is the value of private saving and public saving? A. Private saving equals $2 trillion and public saving equals $1 trillion. B. Private saving equals $1 trillion and public saving equals $2 trillion. C. Private saving equals $9 trillion and public saving equals $3 trillion. D. Private saving equals $3 trillion and public saving equals $9 trillion.

Question

Amiah

Business

20 October, 16:39

In a closed economy, the values for GDP, consumption spending, investment spending, transfer payments, and taxes are as follows: Y = $12 trillion C = $9 trillion I = $3 trillion TR = $2 trillion T = $3 trillion Using the information above, what is the value of private saving and public saving? A. Private saving equals $2 trillion and public saving equals $1 trillion. B. Private saving equals $1 trillion and public saving equals $2 trillion. C. Private saving equals $9 trillion and public saving equals $3 trillion. D. Private saving equals $3 trillion and public saving equals $9 trillion.

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Answers (1)

Know the Answer?

Rachel · Answer 1

A. Private saving equals $2 trillion and public saving equals $1 trillion

Explanation:

The computation of private saving and public saving is shown below:

For private saving, it equals to

= Y - C - T + TR

= $12 trillion - $9 trillion - $3 trillion + $2 trillion

= $2 trillion

And, for the public saving, it equals to

= T - TR

= $3 trillion - $2 trillion

= $1 trillion

Hence, all other options are incorrect except A option