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Answer :
To answer this question is option D) consumption C = $6 trillion, G = $1.3 trillion, NS = $0.7 trillion, I = $0.7 trillion
we need to use the given information to calculate consumption (C), government purchases (G), national saving (NS), and investment (I).
1. Calculate government purchases (G):
G = Taxes - Public saving = $1.5 trillion - $0.2 trillion = $1.3 trillion
2. Calculate national saving (NS):
NS = Private saving + Public saving = $0.5 trillion + $0.2 trillion = $0.7 trillion
3. Since this is a closed economy, we can use the identity:
GDP = C + I + G
Substitute the values of GDP and G into the equation:
$8 trillion = C + I + $1.3 trillion
4. We can also use the identity:
NS = I (since there are no exports and imports in a closed economy)
Substitute the value of NS:
$0.7 trillion = I
5. Now, we can solve for consumption (C):
$8 trillion = C + $0.7 trillion + $1.3 trillion
C = $8 trillion - $0.7 trillion - $1.3 trillion = $6 trillion
So, the correct answer is:
C = $6 trillion, G = $1.3 trillion, NS = $0.7 trillion, I = $0.7 trillion which corresponds to option d.
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