Thank you for visiting In a closed economy suppose that GDP is 12 trillion consumption is 8 trillion government spending is 2 trillion and taxes are 0 5 trillion. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
Final answer:
In a closed economy, savings can be calculated by subtracting consumption, government spending, and taxes from GDP. The savings in this closed economy would be $1.5 trillion.
Explanation:
In a closed economy, savings can be calculated by subtracting consumption, government spending, and taxes from GDP. The formula for calculating savings in a closed economy is GDP - Consumption - Government spending - Taxes.
In this case, the GDP is $12 trillion, consumption is $8 trillion, government spending is $2 trillion, and taxes are $0.5 trillion. Plugging these values into the formula, the calculation would be:
$12 trillion - $8 trillion - $2 trillion - $0.5 trillion = $1.5 trillion.
The savings in this closed economy would be $1.5 trillion.
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Answer:
The amount of savings is $3.5 trillion.
Explanation:
This can be calculated using the following saving is equal to invstment (S = I) formula for a closed economy:
Savings = Y - T - C ........................ (1)
Where;
Y = GDP = $12 trillion
C = consumption = $8 trillion
T = taxes = $0.5 trillion
Substituting thee values into equation (1), we have:
Savings = $12 trillion - $8 trillion - $0.5 trillion
Savings = $3.5 trillion
Therefore, the amount of savings is $3.5 trillion.
