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For a closed economy, GDP is $12 trillion, consumption is $7 trillion, taxes net of transfers are $3 trillion and the government runs a deficit of $1 trillion. What are private saving and national saving? a. $5 trillion and $3 trillion, respectively b. $5 trillion and $1 trillion, respectively c. $2 trillion and $3 trillion, respectively d. $2 trillion and Si trillion, respectively

Respuesta :

Answer:

d. $2 trillion and Si trillion, respectively

Explanation:

The formula to compute the private saving and national saving is shown below:

For Private saving

= GDP - taxes net of transfers - consumption

= $12 trillion - $3 trillion - $7 trillion

= $2 trillion

And, the national saving equal to

= Private saving - public deficit

= $2 trillion - $1 trillion

= $1 trillion

As private saving + public saving equal to national saving but in the given question, the deficit is given so we deduct the same from the private saving

Hence we considered all the information which is given in the question

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