Suppose an economy has a GDP of $10 trillion,and that its national saving rate is 20%.If investment is 25% of GDP,the value of net exports is ________.
A)negative $500 billion
B)$4.5 trillion
C)negative $250 billion
D)$2 trillion
E)none of the above

Question

Quizplus · Accepted Answer

National saving rate = (National saving/GDP) x 100%
20% = (National saving/$10 trillion) x 100%
National saving = $2 trillion

Investment = 25% of GDP = 0.25 x $10 trillion = $2.5 trillion

Net exports = GDP - (National saving + Investment)
Net exports = $10 trillion - ($2 trillion + $2.5 trillion) = -$500 billion

Therefore, the correct answer is A) negative $500 billion.

Suppose an Economy Has a GDP of $10 Trillion,and That