Consider a closed economy. Household saving is $300, business saving is $700, government purchases are $1000, government transfers and interest payments are $500, government tax collections are $1300, and GDP is $5000. What is national saving?Group of answer choices$1000$500$800$0
Question
Consider a closed economy. Household saving is 700, government purchases are 500, government tax collections are 5000. What is national saving?Group of answer choices5000
Solution
To calculate national saving in a closed economy, we need to add up household saving and business saving.
Here's how you do it:
- Start with household saving which is $300.
- Add business saving to this, which is $700.
So, 700 (business saving) = $1000
Therefore, the national saving is $1000.
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