Assume no government and no international trade in a country. Show that measured savings are identical...

Assume no government and no international trade in a country. Show that measured savings are identical to measured investment.

Solutions

Expert Solution

According to macroeconomic identity,

Total output = consumption+ investment.

This can be written as,

Total output less consumption= investment.

It is known that total earnings less consumption is savings.

Hence the last equation can be written as

Savings= investment.

Hence, proved.

Rahul Sunny answered 1 year ago

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