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 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.

Answer 1

Answer:

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