Scenario 8-2. Assume the following information for an imaginary, closed economy.
GDP = $200,000; consumption = $120,000;
government purchases = $35,000; and taxes = $25,000.
-Refer to Scenario 8-2. For this economy, national saving is equal to
A) $30,000.
B) $35,000.
C) $45,000.
D) $60,000.

Question

Quizplus · Accepted Answer

National saving is equal to GDP minus consumption, government purchases, and taxes. Thus, national saving = $200,000 - $120,000 - $35,000 - $25,000 = $20,000. Alternatively, national saving can be calculated as taxes minus government purchases plus the change in private saving: $25,000 - $35,000 + ($200,000 - $120,000 - $25,000) = $45,000. Therefore, the answer is C.