In a closed economy, national savings equals private savings:

Question

Quizplus · Accepted Answer

National savings is equal to private savings plus the budget balance. This is because the budget balance, which is the difference between government tax revenue and expenditures, is a component of national savings. Private savings, which is the sum of household and business savings, is also a component of national savings. Consumption spending and investment spending are not directly related to national savings, while tax receipts are only one component of government revenue and not the entirety of the budget balance. Therefore, (B) is the correct choice.

In a Closed Economy, National Savings Equals Private Savings