In an economy without government or a foreign sector it is always true that
A) actual saving equals actual investment.
B) actual saving equals desired investment.
C) desired saving equals desired investment.
D) desired saving equals actual investment.

Question

Quizplus · Accepted Answer

In such an economy, there are no leaks or injections from the government or foreign sector, hence actual saving and actual investment must balance each other. This is known as the "fundamental identity of macroeconomics". Therefore, actual saving equals actual investment.

In an Economy Without Government or a Foreign Sector It