To state that national saving is equal to investment, for a closed economy, is to state an accounting identity.

Question

Quizplus · Accepted Answer

In a closed economy, national saving is indeed equal to investment by definition, as the total income in the economy that is not consumed or spent by the government (national saving) must be used for investment. This relationship is an accounting identity, reflecting the fact that all the money saved is ultimately invested within the economy.

To State That National Saving Is Equal to Investment, for a Closed