Consider a closed economy (with no foreign trade).Assuming the economy is in equilibrium, use the following information to determine the amount of funds supplied to the loanable funds market. $\begin{array}{ll}
\text { Consumption Spending } & \text { R350 billior } \
\text { Net Taxes } & \text { R270 billior } \
\text { Household Saving } & \text { R250 billion } \
\text { Investment Spending } & \text { R220 billion } \
\text { Government Purchases } & \text { R300 billior }
\end{array}$
A)R220 billion
B)R250 billion
C)R270 billion
D)R300 billion

Question

Quizplus · Accepted Answer

In a closed economy, the only sources of funds for investment spending are savings and taxes. Therefore, the amount of funds supplied to the loanable funds market is the sum of household savings and net taxes, which is R250 billion (R270 billion in net taxes minus R20 billion in dissavings). The other variables (consumption spending and government purchases) do not affect the loanable funds market.

Consider a Closed Economy (With No Foreign Trade) A)R220 Billion B)R250 Billion C)R270 Billion D)R300 Billion

Consider a Closed Economy (With No Foreign Trade) A)R220 Billion
B)R250 Billion
C)R270 Billion
D)R300 Billion