In an economy without government or trade, it must be true that:
A) savings equals investment.
B) consumption equals savings plus investment.
C) consumption plus savings equals investment.
D) consumption plus investment equals national savings.

Question

Quizplus · Accepted Answer

In an economy without government or trade, savings must equal investment because all the money saved by consumers is assumed to be available for investment by businesses. There are no government or foreign entities to borrow or lend, so all saved funds are used for domestic investment.

In an Economy Without Government or Trade, It Must Be