Question

In a country, private savings equals 600, the government budget surplus equals 200, and the trade surplus equals 100. What is the level of private investment in this economy?

a) 300
b) 400
c) 700
d) 900

Answer 1

The level of private investment in this economy is 300

The correct option is A.

Step-by-step explanation:

The level of private investment in this economy can be determined using the equation: Savings = Investment + Government Surplus + Trade Surplus. Rearranging the equation to solve for Investment, we get:

Investment = Savings - Government Surplus - Trade Surplus

Given:

Private Savings = 600

Government Budget Surplus = 200

Trade Surplus = 100

Substituting the values into the equation:

Investment = 600 - 200 - 100

Investment = 300

Therefore, the level of private investment in this economy is a) 300.