Suppose that in a closed economy GDP is 10,000, consumption is 6500, and taxes are 2000. What value of government expenditures would make national saving equal 1500?
A) 2000
B) 3000
C) 7000
D) 9000

Question

Quizplus · Accepted Answer

National saving is calculated as GDP - Consumption - Government Expenditures. Given GDP is 10,000, consumption is 6500, and taxes are 2000, we need government expenditures such that national saving is 1500. So, 10,000 - 6500 - G = 1500, solving for G gives G = 2000.

Suppose That in a Closed Economy GDP Is 10,000, Consumption