Answer:
Consumption expenditure in Cedarland is $6 billion.
Investment in Cedarland is $6 billion.
Explanation:
The GDP is $17 billion.
The government purchases are equal to $5 billion.
The tax revenue to the government is $6 billion.
Private saving is equal to $5 billion.
The government saving is equal to
= Tax revenue - Government spending
= $6 billion - $5 billion
= $1 billion
The national saving is equal to
= Private saving + Government saving
= $5 billion + $1 billion
= $6 billion
In a closed economy, investment expenditure is equal to national savings.
So investment in Cedarland is $6 billion.
In a closed economy the GDP is C + I + G
$17 billion = C + I + G
$17 billion = C + $6 billion + $5 billion
C = $17 billion - $11 billion
C = $6 billion
Consumption expenditure in Cedarland is $6 billion.
