Question

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 equal $9 trillion and public saving equal $ 3 trillion.


B. private saving equal $1 trillion and public saving equal $ 2 trillion.


C. private saving equal $2 trillion and public saving equal $ 1 trillion.


D private saving equal $3 trillion and public saving equal $ 9 trillion.

Answer 1

Answer:

Option (C) is correct.

Explanation:

Private saving refers to the savings of the households which cannot be used for the consumption and tax payment.

Public saving refers to the savings of the government.

Private savings:

= Income - Consumption - Taxes + Transfer payments

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

= $2 trillion

Public savings:

= Taxes - Transfer payment

= $3 trillion - $2 trillion

= $1 trillion