Suppose that in a closed economy GDP is $11 trillion,consumption is $7 trillion,taxes are $2 trillion and the government runs a deficit of $1 trillion.What are private saving and national saving?

Question

Quizplus · Accepted Answer

Private saving is the portion of income that is not spent on consumption, which in this case would be GDP - consumption = $11 trillion - $7 trillion = $4 trillion.
National saving is the sum of private saving and government saving, where government saving is equal to taxes - government deficit = $2 trillion - (-$1 trillion) = $3 trillion. Therefore, national saving is $4 trillion + $3 trillion = $7 trillion. 
Therefore, the correct option is C.

Suppose That in a Closed Economy GDP Is $11 Trillion,consumption