In an economy without government or trade, it must be true that:
A) savings equals investment.
B) consumption equals savings plus investment.
C) consumption plus savings equal investment.
D) consumption plus investment equal national savings.

Question

Quizplus · Accepted Answer

In a closed economy without government or trade, total output (GDP) is equal to consumption plus investment. Since there is no government or trade, savings must equal investment to balance the economy.

In an Economy Without Government or Trade, It Must Be