If we take into account transfer payments (TR)when we derive the saving and investment relationship, the saving and investment equation becomes
A)S = I + NFI.
B)S + TR = I + NFI.
C)S = I + NFI + TR.
D)S = I + NX - TR.
E)I = S + NFI

Question

Quizplus · Accepted Answer

Transfer payments (TR) are added to savings in the saving and investment equation, reflecting the fact that these payments increase the disposable income available for saving, without directly affecting investment (I) or net foreign investment (NFI).

If We Take into Account Transfer Payments (TR)when We Derive