Suppose that in a closed economy GDP is equal to 20,000, consumption equal to 15,000, government purchases equal 4,000 and taxes equal 3,000. What are private saving, public saving, and national saving?

Private saving=20,000-3,000-15,000=2,000

Public Saving=3,000-4,000 = (1,000)

National saving=2,000 + (1,000)

=1,000

Explanation:

Private saving in a close economy shall be calculated as follows:

Private saving=Y-T-C

Y=GDP=20,000

T=taxes=3,000

C=consumption=15,000

Private saving=20,000-3,000-15,000=2,000

Public saving in a close economy shall be calculated as follows:

Public Saving=T-G

T=Taxes=3,000

G=Government purchases=4,000

Public Saving=3,000-4,000 = (1,000)

National saving in a close economy shall be calculated as follows:

National saving = private saving + public saving

=2,000 + (1,000)

=1,000