Consider the following information describing a closed economy with no government and where aggregate output is demand determined.All dollar figures are in billions. TABLE 21-4 Refer to Table 21-4.At the equilibrium level of national income,desired saving ($billions)will be
A)zero.
B)$40.
C)$70.
D)$200.
E)$240.

Question

Consider the following information describing a closed economy with no government and where aggregate output is demand determined.All dollar figures are in billions.  TABLE 21-4 Refer to Table 21-4.At the equilibrium level of national income,desired saving ($billions)will be
A)zero. 
B)$40. 
C)$70. 
D)$200. 
E)$240.

Quizplus · Accepted Answer

At equilibrium, desired saving equals investment. From the table, we see that investment is $80 billion. Therefore, desired saving must also be $80 billion. Since actual saving is $40 billion, desired saving must be $40 billion higher to balance the economy, hence the answer is B) $40 billion.

Consider the Following Information Describing a Closed Economy with No