Question

In a closed​ economy, the values for​ gdp, consumption​ spending, investment​ spending, transfer​ payments, and taxes are as​ follows: y​ = ​$11 trillion c​ = ​$8 trillion i​ = ​$2 trillion tr​ = ​$1 trillion t​ = ​$2 trillion using the information​ above, what is the value of private saving and public​ saving?

Answer 1

Private saving = $2 trillion

Public saving = $1 trillion

Step-by-step explanation:

Private saving = GDP - Taxes + Transfer payments - Consumption spending

= Y - T + TR - C

= $11 - $2 + $1 - $8

= $2 trillion

Public saving = Taxes - Government spending - Transfer payments

= T - G - TR

= $2 - $0 - $1

= $1 trillion

Therefore;

Private saving = $2 trillion, Public saving = $1 trillion