Thank you for visiting In a closed economy the GDP is 12 trillion this year Consumption is 8 trillion and government spending is 2 trillion Taxes are 0 5. 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 :
Answer:
The investment spending is $2 trillion, the last option given in the question.
Explanation:
The formula for GDP for a closed economy is given below:
GDP=C+I+G
where C is the consumption expenditure of the households given as $8 trillion
I is the investment spending in the economy which is unknown
G is government expenditure given as $2 trillion
12 trillion=$8 trillion+I+$2 trillion
12 trillion=10 trillion+I
I=$12 trillion-$10 trillion
I =$2 trillion
The correct answer is $2 trillion , the last option
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Answer:
$2 trillion
Explanation:
GDP is the monetary value of all the goods manufactured and services made within the country for a specific period of time. It shows the economic condition of a country.
As per given data
Total GDP = $12 trillion
Consumption = $8 trillion
Govt. Spending = $2 trillion
Taxes = $0.5 trillion
Disposable income = GDP - Taxes = 12 Trillion - 0.5 trillion = $11.5 trillion
Private saving = Disposable Income - consumption = $11.5 trillion - 8 trillion = 3.5 trillion
Budget Balance = Taxes - Govt. Spending = 0.5 trillion - $2 trillion = -1.5 trillion
Investment Spending = Private saving + budget balance = 3.5 trillion - 1.5 trillion = $2 trillion
