Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 26 - Part IX - Saving, Investment, and the Financial System - Quick Check Multiple Choice - Page 567: 3

Answer

\$300 is the Private Savings in the economy

Work Step by Step

In a Closed Economy, given that Income, Y = \$ 1000 ; Government Spending, G = \$ 200; Taxes, T = \$ 150 Investment, I = Savings, S = \$250 Total Savings = Private Savings + Public Savings Public Savings = Taxes - Government Spending = T - G = \$150 - \$200 = -\$50 Which implies that, Private Savings = Total Savings(=Total Investment) - Public Savings = \$250 - (-\$50) = \$250 + \$50 = \$300
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