9. (Points: 2) In a closed economy, if national income (GDP) is $11trillion,priv

Question

9.

(Points: 2) In a closed economy, if national income (GDP) is $11trillion,private savings is $2trillion, investment is $1.5trillion and taxesamount to $1trillion, then government spending (G) must be

a. $0.5trillion
b. $1.5trillion
c. $2trillion
d. $3trillion

9.

(Points: 2) In a closed economy, if national income (GDP) is $11trillion,private savings is $2trillion, investment is $1.5trillion and taxesamount to $1trillion, then government spending (G) must be

a. $0.5trillion
b. $1.5trillion
c. $2trillion
d. $3trillion

Explanation / Answer

At equilibrium, y=AE C+S+T= C+I+ G i.e. S+T=I+G 2+1=1.5+G so, G=1.5

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