$$\begin{array} { | c | c | c | }
\hline G D P ( Y ) & \text { Consumption (C) } & \text { Investment (I) } \
\hline \$ 0 & \$ 60 & \$ 30 \
\hline 100 & 120 & 40 \
\hline 200 & 180 & 50 \
\hline 300 & 240 & 60 \
\hline 400 & 300 & 70 \
\hline 500 & 360 & 80 \
\hline
\end{array}$$ (Advanced analysis) The table gives data for a private closed economy. The letters Y, C, S, and I are used to represent real GDP, consumption, saving, and investment, respectively. The equation
Representing the investment schedule for the economy is
A) I = 0.3Y.
B) I = 80 ? 0.3Y.
C) I = 30 + 0.1Y.
D) I = I0 = 30.

Question

$$\begin{array} { | c | c | c | } 
\hline G D P ( Y ) & \text { Consumption (C) } & \text { Investment (I) } \
\hline \$ 0 & \$ 60 & \$ 30 \
\hline 100 & 120 & 40 \
\hline 200 & 180 & 50 \
\hline 300 & 240 & 60 \
\hline 400 & 300 & 70 \
\hline 500 & 360 & 80 \
\hline
\end{array}$$ (Advanced analysis) The table gives data for a private closed economy. The letters Y, C, S, and I are used to represent real GDP, consumption, saving, and investment, respectively. The equation
Representing the investment schedule for the economy is
A) I = 0.3Y.
B) I = 80 ? 0.3Y.
C) I = 30 + 0.1Y.
D) I = I0 = 30.

Quizplus · Accepted Answer

In a closed economy, total output (Y) can be represented as C + I + G, where G is government spending. Since this is a private closed economy, we can ignore government spending (G) and assume that all output is either consumed (C) or invested (I). Therefore, we can write:

Y = C + I

We are given that S represents saving, and saving is defined as:

S = Y − C

Rearranging this equation, we get:

Y = C + S

Substituting the second equation into the first, we get:

C + S = C + I

Simplifying, we get:

S = I

This tells us that saving must equal investment for the economy as a whole. We are given that S = 30 + 0.1Y, so:

I = 30 + 0.1Y

This is the investment schedule for the economy. Therefore, the best choice is C.

(Advanced Analysis) the Table Gives Data for a Private Closed