Question

for a closed economy, gdp is $11 trillion, consumption is $7 trillion, taxes are $3 trillion and the government runs a surplus of $1 trillion. what are private saving and national saving? $4 trillion and $1 trillion, respectively $4 trillion and $5 trillion, respectively $1 trillion and $2 trillion, respectively $1 trillion and $1 trillion, respectively

Answer 1

For a closed economy with the given figures, the private saving is calculated as $1 trillion, and the national saving, which includes the government's surplus, is $2 trillion.

Step-by-step explanation:

In a closed economy, to find private saving, we subtract taxes and consumption from GDP:

Private Saving = GDP - Consumption - Taxes

Private Saving = $11 trillion - $7 trillion - $3 trillion = $1 trillion.

For national saving, we must consider both private saving and the government surplus. National saving is the sum of private saving and the government surplus:

National Saving = Private Saving + Government Surplus

National Saving = $1 trillion + $1 trillion = $2 trillion.

Therefore, the private saving is $1 trillion and the national saving is $2 trillion.