Suppose the following information describes the economy: $$\begin{array} { l r }
\text { Consumption } & 8000 \
\text { Investment } & 1,000 \
\text { Government purchases } & 1,000 \
\text { Net exports } & 0 \
\text { Government transfers and interest payments } & 500 \
\text { Government tax collections } & 1,700
\end{array}$$ Private saving equals ____; public saving equals ______; national saving equals ____.

Question

Suppose the following information describes the economy: $$\begin{array} { l r } 
\text { Consumption } & 8000 \
\text { Investment } & 1,000 \
\text { Government purchases } & 1,000 \
\text { Net exports } & 0 \
\text { Government transfers and interest payments } & 500 \
\text { Government tax collections } & 1,700
\end{array}$$ Private saving equals ____; public saving equals ______; national saving equals ____.

Quizplus · Accepted Answer

Private saving is equal to income minus consumption, so private saving is $10{,}000 - $8{,}000 =$2{,}000. Public saving is equal to government tax collections minus government purchases minus government transfers and interest payments, so public saving is $1{,}700 - $1{,}000 - $500 = $200. National saving is equal to private saving plus public saving, so national saving is $2{,}000 + $200 =$2{,}200. However, since net exports are zero, domestic investment must equal domestic saving. Thus national saving must also equal $1{,}000. Therefore, the correct answer is B.

Suppose the Following Information Describes the Economy Private Saving Equals ____; Public Saving Equals ______; National Saving

Suppose the Following Information Describes the Economy Private Saving Equals ; Public Saving Equals __; National Saving