The figure given below represents the leakages and injections in an economy. Figure 10.2 In the figure:
I, I₁: Investment;
G: Government spending;
EX, EX₁: Exports;
T: Taxes;and
M: Imports.
Refer to Figure 10.2.Suppose that I+G+EX equals $20 and the economy is in equilibrium.What is the amount of saving when T = $0 and M = $5 at the equilibrium level?

Question

The figure given below represents the leakages and injections in an economy. Figure 10.2

In the figure:
I, I₁: Investment;
G: Government spending;
EX, EX₁: Exports;
T: Taxes;and
M: Imports.
Refer to Figure 10.2.Suppose that I+G+EX equals $20 and the economy is in equilibrium.What is the amount of saving when T = $0 and M = $5 at the equilibrium level?

Quizplus · Accepted Answer

At equilibrium, Leakages (Savings + Taxes + Imports) = Injections (Investment + Government spending + Exports)
Let Savings = S
Then,  S + 0 + 5 = 20
S = 15
Therefore, the amount of saving when T = $0 and M = $5 at the equilibrium level is $15. The correct choice is C.

The Figure Given Below Represents the Leakages and Injections in an Economy