Question

Using the following data, calculate private savings for a closed economy. Please round to 1 decimal place.

• y=12.5
• c=7.8
• i=2.8
• tr=1.5
• t=1.6

(a) 2.8
(b) 3.1
(c) 3.9
(d) 4.5

Answer 1

To calculate private savings for a closed economy, subtract consumption and net taxes from national income. Using the given values.

correct option is (d) 4.5

Step-by-step explanation:

The student asked for the calculation of private savings for a closed economy using the given data. The formula for calculating private savings in a closed economy is:

Private Savings = Y - C - T

Where:

• Y = National income (12.5)
• C = Consumption (7.8)
• T = Taxes, net of transfers (1.6 - 1.5)

Substituting the provided values into the formula gives us:

Private Savings = 12.5 - 7.8 - (1.6 - 1.5)

Now let's calculate:

Private Savings = 12.5 - 7.8 - 0.1 = 4.6

So, rounding to one decimal place, the answer is 4.6, which means that none of the options (a) 2.8, (b) 3.1, (c) 3.9, (d) 4.5 provided by the student is correct.