Which of the following statements is TRUE?
A) If private saving is greater than private investment, then the private sector has a surplus.
B) If private investment is greater than private saving, then the private sector has a deficit.
C) If private investment is greater than private saving, then either the government or net export sector must have a surplus.
D) All of the above answers are correct.

Question

Quizplus · Accepted Answer

All the statements are correct and reflect basic principles of national accounting. A) describes a situation where the private sector is saving more than it is investing, indicating a surplus. B) describes the opposite scenario, where the private sector is investing more than it is saving, indicating a deficit. C) is based on the sectoral balances approach, which states that if one sector (in this case, the private sector) spends more than its income (a deficit), another sector must save the equivalent amount, leading to a surplus in the government or foreign sector.

Which of the Following Statements Is TRUE