When public saving falls by $2b and private saving falls by $1b in a closed economy,
A)investment falls by $1b.
B)investment falls by $3b.
C)investment increases by $1b.
D)investment falls by $2b.

Question

Quizplus · Accepted Answer

In a closed economy, national saving equals investment. If public saving falls by $2b and private saving falls by $1b, total national saving falls by $3b, leading to a $3b decrease in investment.

When Public Saving Falls by $2b and Private Saving Falls