Question

Consider the following closed Keynesian Economy:

C=500+.75Y
I=300
G=400
​
What is the level of saving?
A.500
B.700
C.900
D.1100
​

Answer 1

In a closed Keynesian economy with specific equations for consumption, investment, and government spending, the level of saving can be calculated using the equation S = Y - C - G.

Step-by-step explanation:

This closed Keynesian Economy can be represented by the following equations:

• C = 500 + 0.75Y
• I = 300
• G = 400

To find the level of saving, we can use the equation:

• S = Y - C - G

Substituting the given values, we get:

• S = Y - (500 + 0.75Y) - 400
• S = 0.25Y - 900

Therefore, the level of saving is 0.25Y - 900.