IIn a closed economy, national saving:
A) is usually greater than investment
B) is usually less than investment because of the leakage of taxes
C) must equal investment
D) must equal government tax revenue

Question

Quizplus · Accepted Answer

In a closed economy without international trade, all income is either consumed or saved. Therefore, total income is equal to consumption plus saving. Investment, on the other hand, is the addition of physical capital to the economy. The source of financial capital for investment is saving. Thus, saving must be equal to investment for the economy to be in equilibrium.

IIn a Closed Economy, National Saving