In a closed economy, national saving can be expressed by the equation S = (Y - T - C) + (T - G). What does (Y - T - C) represent?
A) Private saving
B) Government tax revenue
C) Public saving
D) Investment

Question

Quizplus · Accepted Answer

(Y - T - C) represents private saving, which is the amount of disposable income that households save. Y represents national income, T represents taxes and C represents consumption spending. Therefore, (Y - T - C) represents the difference between disposable income and the amount of money spent on consumption and taxes.

In a Closed Economy, National Saving Can Be Expressed by the Equation