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For a closed economy, GDP is $11 trillion, consumption is $7 trillion, taxes are $2.5 trillion and the government runs a surplus of $1 trillion. What are private saving and national saving?

1. $1.5 trillion and $2.5 trillion, respectively
2. $2.5 trillion and $1.5 trillion, respectively
3. $2.5 trillion and $2.5 trillion, respectively
4. $1.5 trillion and $1.5 trillion, respectively

Respuesta :

Answer:

Option A.

Explanation:

Given information:

GDP = $11 trillion

Consumption = $7 trillion

Taxes = $2.5 trillion

Surplus = $1 trillion

The formula for private saving is

[tex]\text{Private saving}=GDP-Tax-Consumption[/tex]

[tex]\text{Private saving}=11-2.5-7[/tex]

[tex]\text{Private saving}=1.5[/tex]

The formula for national saving is

[tex]\text{National saving}=GDP-Consumption-\text{Government purchase}[/tex]

[tex]\text{National saving}=11-7-(2.5-1)[/tex]

[tex]\text{National saving}=11-7-1.5[/tex]

[tex]\text{National saving}=2.5[/tex]

The private saving and national saving are $1.5 trillion and $2.5 trillion, respectively.

Therefore, the correct option is A.

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