Suppose a small closed economy has GDP of $5 billion,Consumption of $3 billion,and Government expenditures of $1 billion.Then domestic investment and national saving are both $1 billion.

Question

Quizplus · Accepted Answer

GDP (Y) = Consumption (C) + Investment (I) + Government expenditures (G)
$5 billion = $3 billion + Investment (I) + $1 billion
Investment (I) = $1 billion
National Saving (S) = Y - C - G
S = $5 billion - $3 billion - $1 billion
S = $1 billion
Since domestic investment (I) equals national saving (S), both are $1 billion.

Suppose a Small Closed Economy Has GDP of $5 Billion,Consumption