How does savings relate to investment using the national income accounting identity?
A) Savings = Investment + Government spending
B) Savings = Investment - Government spending
C) Savings = Investment + Exports - Imports
D) Savings = Output - Investment

Question

Quizplus · Accepted Answer

Savings in the national income accounting identity is related to investment through the equation Savings = Investment + (Exports - Imports). This equation reflects the idea that a country's total savings is equal to its total investment plus its net exports (exports minus imports). This relationship is part of the broader national income accounting framework, which helps in understanding the flow of money within an economy.

How Does Savings Relate to Investment Using the National Income