Which of the following statements is correct?
A)The total income in the economy that remains after paying for consumption and government purchases is called private saving.
B)The sum of private saving and national saving is called public saving.
C)For a closed economy,the sum of private saving and public saving must equal investment.
D)For a closed economy,the sum of consumption,national saving,and taxes must equal GDP.

Question

Quizplus · Accepted Answer

In a closed economy, national saving is equal to private saving plus public saving (as there are no international transactions involved). Therefore, the sum of private saving and public saving must equal investment. Option A is incorrect as private saving is the amount of income that remains after paying for consumption, not the total income. Option B is incorrect as public saving is the difference between government revenue and government expenditures, not the sum of private and national saving. Option D is incorrect as taxes are not necessarily equal to GDP, as taxes are a percentage of income, not output.

Which of the Following Statements Is Correct