The national income identity can be rearranged to show that Private saving + Government saving + Foreign saving = Investment.

Question

Quizplus · Accepted Answer

This is true. The national income identity is Y = C + I + G + NX, where Y is national income, C is consumption, I is investment, G is government spending, and NX is net exports. By rearranging, we get I = Y - C - G - NX. Private saving is equal to Y – C, government saving is equal to T - G (where T is taxes), and foreign saving is equal to NX. So, Private saving + Government saving + Foreign saving = Y – C + T – G + NX = I, which means that the two sides of the equation are equal.

The National Income Identity Can Be Rearranged to Show That