Consider the following information describing a closed economy with no government and where aggregate output is demand determined.All dollar figures are in billions. TABLE 21-4
-Refer to Table 21-4.At the equilibrium level of national income,desired saving ($billions)will be
A)zero.
B)$40.
C)$70.
D)$200.
E)$240.

Question

Consider the following information describing a closed economy with no government and where aggregate output is demand determined.All dollar figures are in billions.  TABLE 21-4
-Refer to Table 21-4.At the equilibrium level of national income,desired saving ($billions)will be
A)zero. 
B)$40. 
C)$70. 
D)$200. 
E)$240.

Quizplus · Accepted Answer

At the equilibrium level of national income, aggregate output is equal to aggregate expenditure, which is equal to $800 billion in this case. At this level of output, disposable income is also $800 billion. Given that consumption expenditure is $720 billion, desired saving is $80 billion ($800 billion-$720 billion). Therefore, the closest option to $80 billion is option B, which is $40 billion.

Consider the Following Information Describing a Closed Economy with No