Which of the following correctly describes the relationship between savings,the government budget balance,and the current account?
A)Private savings plus the government budget balance must equal private investment plus the current account.
B)Private savings plus the current account must equal private investment plus the government budget surplus or deficit.
C)Private savings plus private investment must equal the current account plus the government budget balance.
D)Private investment must equal private savings plus the current account minus the government budget balance.

Question

Quizplus · Accepted Answer

The correct relationship is described by the national income identity, where private savings plus the government budget balance (whether surplus or deficit) equals private investment plus the current account. This identity reflects the flow of funds in an economy and how savings, investment, and the balances of the government and the current account are interconnected.

Which of the Following Correctly Describes the Relationship Between Savings,the