Question

In the underground city of Neverwhere, GDP is $15 trillion, consumption is $10 trillion, and government spending is $2.5 trillion. Taxes are $1 trillion and the net capital inflow is $0.5 trillion. Total savings for the economy of Neverwhere is $_____ trillion.

Answer 1

$3 trillion

Step-by-step explanation:

Given that,

GDP = $15 trillion

consumption = $10 trillion

Government spending = $2.5 trillion

Taxes = $1 trillion

Net capital inflow = $0.5 trillion

Investment:

= GDP - Consumption - Government spending + Net capital inflow

= $15 - $10 - $2.5 + $0.5

= $3 trillion

We know that savings is equal to investment spending.

Therefore, the total savings for the economy of Neverwhere is $3 trillion.