Public saving equals taxes minus government spending minus transfer payments.

Question

Quizplus · Accepted Answer

This statement is true according to the national income accounting identity which states that Y (income or output) = C (consumption) + I (investment) + G (government spending) + NX (net exports). By rearranging this equation, we get S (saving) = Y - C - G - NX, which can be further broken down into private saving (Y - T - C) and public saving (T - G). Therefore, public saving equals taxes (T) minus government spending (G) minus transfer payments.

Public Saving Equals Taxes Minus Government Spending Minus Transfer Payments