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Answer :
Investment spending in the closed economy described is $2 trillion, calculated by subtracting consumption and government spending from the total GDP, which is $12 trillion.
To calculate investment spending in a closed economy where GDP is given along with consumption, government spending, and taxes, we use the following formula:
GDP = Consumption + Investment + Government Spending (since there are no exports or imports in a closed economy and taxes are not a part of this equation)
Given that:
- GDP = $12 trillion
- Consumption = $8 trillion
- Government Spending = $2 trillion
To find Investment, we rearrange the formula:
Investment = GDP - Consumption - Government Spending
Investment = $12 trillion - $8 trillion - $2 trillion
Investment = $2 trillion.
Therefore, the investment spending in this closed economy is $2 trillion.
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Answer:
$2 trillion
Explanation:
In a closed economy GDP is $12 trillion
Consumption is $8 trillion
Government spending is $2 trillion
Taxes is $0.5 trillion
Therefore the investment spending can be calculated as follows
= $12 trillion - $8trillion-$2trillion
= $2 trillion
Hence investment spending is $2 trillion
