Thank you for visiting Assume the following information for an imaginary closed economy GDP 5 trillion Consumption 3 1 trillion Government purchases 0 7 trillion Taxes 0 9 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:
Investment is calculated in a closed economy using the equation GDP = Consumption + Investment + Government Spending. Given the numerical values, we find that Investment in this case is $1.2 trillion.
Explanation:
The subject of the question is about an equation in macroeconomics used to analyze a closed economy: GDP = Consumption + Investment + Government Spending.
Given the economic indicators: GDP = $5 trillion, consumption = $3.1 trillion, and government purchases = $0.7 trillion, you can easily calculate the level of investment.
In this equation, Investment equals GDP minus Consumption and Government Spending. So, Investment = GDP - Consumption - Government Purchases = $5 trillion - $3.1 trillion - $0.7 trillion = $1.2 trillion.
Therefore, for this imaginary, closed economy, the investment amounts to $1.2 trillion.
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Thank you for reading the article Assume the following information for an imaginary closed economy GDP 5 trillion Consumption 3 1 trillion Government purchases 0 7 trillion Taxes 0 9 trillion. We hope the information provided is useful and helps you understand this topic better. Feel free to explore more helpful content on our website!
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