Suppose the economy is closed and consumption is 8 million,taxes are 2 million,and government purchases are 1.75 million.If national saving amounts to 1.25 million,then what is GDP?
A)9 million.
B)9.5 million.
C)13 million.
D)11 million.

Question

Quizplus · Accepted Answer

In a closed economy, GDP (Y) is equal to the sum of consumption (C), investment (I), and government purchases (G). National saving is equal to investment in a closed economy, so we have Y = C + I + G. Given C = 8 million, G = 1.75 million, and national saving (I) = 1.25 million, GDP is 8 + 1.25 + 1.75 = 11 million.

Suppose the Economy Is Closed and Consumption Is 8 Million,taxes