Suppose the economy is closed and that national saving is $2 trillion,that consumption is $7 trillion,and that government purchases are $1 trillion.What is GDP?

Question

Quizplus · Accepted Answer

In a closed economy, GDP (Y) is the sum of consumption (C), investment (I), and government purchases (G). National saving (S) is equal to investment in a closed economy, so S = I. Given S = $2 trillion, C = $7 trillion, and G = $1 trillion, GDP = C + I + G = $7 trillion + $2 trillion + $1 trillion = $10 trillion.

Suppose the Economy Is Closed and That National Saving Is