Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 2,500, consumption equals 7,000, and government purchases equal 3,000. What are private saving and public saving?
A)1,500 and -500, respectively
B)1,500 and 500, respectively
C)1,000 and -500, respectively
D)1,000 and 500, respectively

Question

Quizplus · Accepted Answer

Private saving is calculated as GDP - Taxes - Consumption, which is 11,000 - 2,500 - 7,000 = 1,500. Public saving is calculated as Taxes - Government Purchases, which is 2,500 - 3,000 = -500.

Suppose That in a Closed Economy GDP Is Equal to 11,000