In a private closed economy, _____ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _____ investment is equal to saving.
A) planned; actual
B) actual; planned
C) gross; net
D) net; gross

Question

Quizplus · Accepted Answer

In a closed economy, planned investment is the same as actual investment, so option A is incorrect. Gross investment refers to total investment before depreciation, while net investment is gross investment minus depreciation. Since the question does not specify which type of investment is being referred to, option C and D are both incorrect. Therefore, the correct answer is B, where equilibrium occurs only when actual investment equals planned investment, which is the same as saying investment equals saving.

In a Private Closed Economy, _____ Investment Is Equal to Saving