Question

If GDP = $1,000, consumption = $700, taxes = $100, and government purchases = $200, how much is saving and investment? a. Saving = $200; investment = $200 b. Saving = $0; investment = $0 c. Saving = $100; investment = $100 d. Saving = $300; investment = $300 e. Saving = $200; investment = $100 Hide Feedback Incorrect

Answer 1

If GDP = $1,000, consumption = $700, taxes = $100, and government purchases = $200, the amount of saving and investment is: e. Saving = $200; investment = $100 .

What is saving and investment?

GDP formula is:

GDP = Consumption + Investment + Government Purchases + Net Exports

Where:

GDP = $1,000

Consumption = $700

Taxes = $100

Government Purchases = $200

Saving:

Saving = GDP - Consumption - Taxes

Saving = $1,000 - $700 - $100

Saving = $200

So, the amount of saving is $200.

Investment:

Investment = GDP - Consumption - Government Purchases

Investment = $1,000 - $700 - $200

Investment = $100

So, the amount of investment is $100.

Therefore the correct option is E.