Suppose a closed economy had public saving of $2 trillion and private saving of $4 trillion. What are national saving and investment for this country?
A)$6 trillion, $6 trillion
B)$6 trillion, $2 trillion
C)$1 trillion, $4 trillion
D)$2 trillion, $2 trillion

Question

Quizplus · Accepted Answer

In a closed economy, national saving is the sum of public and private saving. Therefore, national saving is $2 trillion (public) + $4 trillion (private) = $6 trillion. In a closed economy, national saving equals investment, so investment is also $6 trillion.

Suppose a Closed Economy Had Public Saving of $2 Trillion