suppose private saving in a closed economy is $12 billion and investment is $10 billion. Which...

suppose private saving in a closed economy is $12 billion and investment is $10 billion. Which of the following are true?

A. national saving must equal $12 billion

B. public saving must equal $2 billion

C. Government budget surplus must equal $2 billion

D. Government budget deficit must equal $ 2 billion

Solutions

Expert Solution

D. Government budget deficit must equal $ 2 billion

The national saving in the closed economy is equal to investment

National saving =private saving + public saving

Public saving =budget balance

Budget balance =investment -private saving =10-12=-2

the budget has a deficit of -$2 billion

Rahul Sunny answered 1 year ago

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