Question

The country of Growpaw does not trade with any other country. Its GDP is $20 billion. Its government purchases $3 billion worth of goods and services each year, collects $4 billion in taxes, and provides $2 billion in transfer payments to households. Private saving in Growpaw is $4 billion. What is investment in Growpaw

Answer 1

$3 billion

Step-by-step explanation:

Gross domestic product is the sum of all final goods and services produced in an economy within a given period which is usually a year.

Savings is equals to investment.

Savings is the sum of private and public savings

Public savings = taxes - transfer payment - Government Spending

$4 billion - $3 billion - $2billion = ($1 )billion

Private saving = $4 billion

Savings = $4 billion - $1 billion = $3 billion

Savings is equal to investment, so investment would be $3 billion

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