Suppose consumption is $500 billion,investment is $120 billion,government purchases equal $90 billion,and net exports are negative $20 billion.The saving rate
Is ________.
A)20%
B)83.3%
C)14.5%
D)3%
E)none of the above

Question

Suppose consumption is $500 billion,investment is $120 billion,government purchases equal $90 billion,and net exports are negative $20 billion.The saving rate 
Is ________.
A)20% 
B)83.3% 
C)14.5% 
D)3% 
E)none of the above

Quizplus · Accepted Answer

The saving rate can be calculated as follows:
National Savings = Y - C - G - I - NX
National Savings = $500bn - $500bn - $90bn - $120bn - (-$20bn)
National Savings = $110bn
Saving Rate = National Savings / Y
Saving Rate = $110bn / $760bn
Saving Rate = 0.145 or 14.5%

Suppose Consumption Is $500 Billion,investment Is $120 Billion,government Purchases Equal