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Answer :
Final answer:
Private saving is calculated by subtracting consumption and taxes from GDP, resulting in $2 trillion. National saving is private saving minus the government deficit, totaling $1 trillion. The correct answers are private saving of $2 trillion and national saving of $1 trillion (b).
Explanation:
To calculate private saving in a closed economy, we subtract consumption and taxes net of transfers from the GDP. Here, private saving is $12 trillion (GDP) - $7 trillion (consumption) - $3 trillion (taxes net of transfers) = $2 trillion.
To calculate national saving, we also need to account for government saving, which is the opposite of the government deficit. Since the government runs a $1 trillion deficit, national saving is the private saving minus the government deficit, which is $2 trillion - $1 trillion = $1 trillion.
In this scenario, the correct answer would be b. $5 trillion for private saving and $1 trillion for national saving.
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Answer:
d. $2 trillion and Si trillion, respectively
Explanation:
The formula to compute the private saving and national saving is shown below:
For Private saving
= GDP - taxes net of transfers - consumption
= $12 trillion - $3 trillion - $7 trillion
= $2 trillion
And, the national saving equal to
= Private saving - public deficit
= $2 trillion - $1 trillion
= $1 trillion
As private saving + public saving equal to national saving but in the given question, the deficit is given so we deduct the same from the private saving
Hence we considered all the information which is given in the question
