In a closed economy, saving is what remains after consumption expenditures and government purchases.

Question

Quizplus · Accepted Answer

In a closed economy, the total output (Gross Domestic Product) is either consumed or saved. The formula for GDP can be written as GDP = C + S, where C represents consumption expenditures and S represents saving. Therefore, saving is what remains after consumption expenditures have been subtracted from the total output. Government purchases are not included in the calculation of saving.

In a Closed Economy, Saving Is What Remains After Consumption