Thank you for visiting In an open economy GDP is 12 trillion this year Consumption is 8 trillion and government spending is 2 trillion Taxes are 0 5 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 :
Answer:
D. $4 trillion
Explanation:
Given that
GDP = 12 trillion
C = 8 trillion
G = 2 trillion
T = 0.5 trillion
X = 1 trillion
M = 3 trillion
Recall that
I = national savings + (M - X)
And national savings = GDP - C - G
Thus
National savings = 12 - 8 - 2
= 2 trillion
Thus,
I = 2 + (3 - 1)
I = 2 + 2
I = 4 trillion.
Therefore, investment spending is $4 trillion
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